Home > multifamily, Uncategorized > The Biggest Surprise in 2013

The Biggest Surprise in 2013

Since late last fall, I’ve been telling people, “The biggest economic surprise in 2013 could be that home price appreciation is much higher than people are anticipating.”

The news is already bearing this out. The latest Case-Shiller numbers are astounding. Home prices in their 20-city index are up 8.1 percent from January 2012. All cities in the index had increasing home values. Even the housing graveyards like Las Vegas (up 15 percent) and Atlanta (up 13 percent) have recovered.

Here are the reasons why I expect this acceleration in home prices to continue throughout 2013 and into next year.

  • Homebuyer psychology has changed dramatically for the better.
  • Mortgage rates continue at historically ridiculously low levels.
  • The inventory of homes available for sale in many markets is remarkably low.
  • Home builders can’t build enough houses in 2013 to keep up with the new demand.

Here are some new reasons why house prices could increase substantially in the coming months:

  • Construction materials costs are high and getting higher as building increases.
  • Homebuilders are finding that labor is hard to come by.

The pressure to increase prices of new homes will be strong with increasing construction and labor costs. When home builders push through price increases, it will also push up the price of existing homes in the same market.

A year ago — on March 7, 2012 — I wrote my first blog about how the housing market was starting to change. Specifically that the buyer psychology was beginning a monumental 180-degree turn from “I hate houses and will never buy one again” to “When prices start shooting up 30 percent per year, I think I’m falling in love all over again.”

Since that initial blog, I have documented the continuous improvement in the American housing market. If you are in the real estate business and want to be able to explain to potential buyers why the market is changing, these posts could help you document the story.

Feb. 4, 2013. More Good News for the Single-Family Market and the Economy

Jan. 28, 2013. Americans Like Owning a Home After All

Jan. 4, 2013. More Bullish Housing News

Dec. 10, 2012. It’s Time for Commercial Real Estate Investors to Rethink the Housing Market

Nov. 13, 2012. Mortgage Market Continues Improvement

Nov. 5, 2012. More Good News for Residential Brokerage

Oct. 11, 2012. The Drumbeat of a Housing Recovery is Getting Louder

Aug. 23, 2012. The Geniuses are Catching on, Finally

July 2, 2012. More Evidence of Texas’ Housing Market Strength

June 25, 2012. Texas’ Residential Sales Market Recovering

June 14, 2012. Texas Home Building Recovery Has Begun

June 5, 2012. What If You Had Bought at the Peak?

Mar. 7, 2012. Consumer Attitude Toward Housing Brightens

Reprint from Blog of recenter.tamu.edu       by Mark Dotzour

Categories: multifamily, Uncategorized
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