My opinion is it will be much of the same. The wildcard is will happen with the housing inventory for sale. Will it remain at this current historic low or given the rising prices will more homeowners who had been underwater gain enough equity and finally now is the time to sell. Granted many of these will be owners who were facing a short sale will just break even and hopefully a few will make a small profit but this is a great improvement and a relief to many.
If it does remain low, then I predict the number of sales will fall and it could be as by as much as 20%. The bright side to this fall in sales, home price will rise and it could be higher than the 2-4% predictions I am reading and the 7.23% year over year increase seen here in the Napa Valley. My prediction is 10% plus. The downside to this is more frustration for buyers who are facing fierce competition in trying to buy a home.
This battle was up to the last 2 months being waged in mostly enter level homes has expanded and is now beginning to happen in the mid to upper end of the market. An example, I am currently working with buyers in the $700-950,000 range (a mid range for the Napa Valley) which up to the last two months was a relatively slow market. Of the 5 homes I showed them on Saturday, 2 are already in escrow (the sellers have accepted an offer) and the one they liked and made an offer on has another offer coming in. The irony here, this home is about $100-150,000 above were it might appraise.
I leave it to you, the reader, to explore their local real estate market and in almost every case this is what is happening. The laws of economics truly do apply here, too little of something for sale means higher prices and the only unknown just how high will prices go? The big caveat, when things get too means only one thing to me, a precipice and at some point the only way off of one is not pretty. Hopefully things don’t come to this.
See my next post tomorrow for Fannie Mae’s January 2013 National Housing Survey.
If I can help you find the perfect Napa Valley property, please contact me