As 2012 comes to an end, most real estate professionals sit on the edge of their seats, anticipating the outcome of the fiscal cliff and how it will affect the housing market going into 2013.
However, there are real estate trends, both nationally and locally, from 2012 that may indicate what is expected in 2013, according to the latest trend data released by Realtor.com.
Inventory was a huge player in 2012, with the total U.S. for-sale inventory falling 45% since its peak in 2007 to 1.674 million units for sale. The median age of the inventory dropped as well, down by 11.4% since November 2011. These numbers indicate supply-and-demand playing a big role moving into 2013, at least for the first half of the year.
On a local level, markets that were the epicenter of the housing crisis continued to gain momentum while the Midwest and Northeast areas — typically more industrialized — continued to falter. States such as Arizona, California and Washington ended the year with dramatic drops in inventory and significant price appreciation of at least 10% year-over-year.
Click on the image below to see the greatest year-over-year inventory reductions.
Conversely, markets in states such as Illinois, Indiana and Ohio, which gained little price appreciation, did not experience dramatic inventory change. Only five areas saw a year-over-year increase in for-sale inventory including Cedar Rapids, Iowa, Philadelphia, Pa., and Shreveport, La. This increase in inventory indicates a continued weakness in both their housing markets as well as the local economy.
Richard Green, director of USC Lusk Center for Real Estate, believes the housing inventory will even out in 2013.
"I was surprised at how good 2012 turned out to be,” Green told HousingWire. “As prices go up, you’re going to see fewer and fewer people underwater on their houses. They are going to feel more and more free to sell their houses."
Green also offered advice to real estate professionals who may be unsure about what the next few months will bring to the housing market.
"The fiscal cliff is overhyped. If we go over it, we go over it. It’s not a cliff, it’s a slope."
This reiterates a report released by Barclays on Monday indicating that if the fiscal cliff were to hit, the housing industry would likely slow, but not enough to a point where it would become particularly vulnerable to a sharp contraction.
Additionally, Doug Duncan, chief economist of Fannie Mae, said Tuesday, "Despite unsteady macroeconomic conditions, we anticipate housing and mortgage activity to gain momentum in 2013."