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Hyperventilation over the housing market recovery is reaching gale force. National news outlets are quoting some experts as saying that housing will lead economic growth this year.
Pass the paper bags. The truth is that a consistent rise in home values in 2012—of 5.9% according to Zillow, and 5.5% according to the Case-Shiller Index—falls far short of recapturing a 30% drop in values since 2006.
This year, several factors will keep home values in check:
The unexpected has become the norm for the US real estate market. As evidenced by the annual Profile of Home Buyers and Sellers, recently released by the National Association of Realtors (NAR), market trends are shifting both quickly and often. Whatever was happening in your local market last spring isn’t likely to be happening now.
Here’s a rundown of the top trends outlined in the NAR report and how you can make the most of them:
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If you’ve inherited or converted even a small slice of space to a standalone living unit that could be rented, you’ve substantially boosted the value of the whole property.
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2013 is likely to see home values stabilizing—but not because of sale prices. A strengthening labor market is the rising tide that will lift property values, says Abbe Will, research analyst with the Harvard Joint Center on Housing.
While analysts argue whether 2012 was in fact the turnaround year for home sales, it’s clear that home remodeling is gaining traction.
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The Harvard Joint Center on Housing’s Leading Indicator of Remodeling Activity projects steadily rising home maintenance and improvement spending in 2013. Here’s how to concentrate your money and effort on the projects most likely to deliver a quick return:
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That sacred cow, the home mortgage deduction, is likely headed for the slaughterhouse. As Congress explores ways to raise revenue, analysts agree that the deduction is likely to be trimmed.
If so, property values could erode as much as 15%, warns the National Association of Realtors (though others believe the effect could be muted).
Get ahead before a reduced deduction becomes a reality by refinancing now, especially if you want to extract equity to finance improvements. Appraisers will have to take into consideration the ripple effect of any change in the deduction on home values, and that could undermine your future ability to get the financing package you need.
Savvy homebuyers these days know that a home is worth more based on its location than on its square footage.
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Listen to BOB VILA ON POCKET NEIGHBORHOODS, or read the text below:
Price is the number one factor for home buyers, according to the annual Profile of Home Buyers and Sellers recently released by the National Association of Realtors (NAR).
No surprise there—except total purchase price isn’t the overriding factor; more important to buyers is how that price breaks down into monthly carrying costs.
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For the DIY-minded, it makes perfect sense. If you’ve fixed up the house on your own, why shouldn’t you sell it on your own too?
Like starry-eyed television shows that portray renovation almost as a heat-and-serve proposition, selling ‘by owner’ usually involves fees that popular websites don’t mention.
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Here’s the breakdown on how you can capture the greatest ROI for selling DIY:
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Brace for a remodeling revival in 2013. The Harvard Joint Center on Housing is predicting double-digit growth for home remodeling next year, citing stabilizing home values and continued low home financing costs as the magic factors.
Here’s what this means for dedicated do-it-yourselfers:
