The real estate industry made big strides in the latter half of 2012 and is expected to do so again throughout the coming year, leading to a larger-scale economic gains.
There will likely be numerous improvements in the housing market over the course of the year as continued high affordability and rising prices couple with economic improvements that will drive down late payments, according to the latest MarketPulse Report from the industry tracking firm CoreLogic. For instance, it’s believed that prices will rise some 6 percent over the course of the year — though that growth is down from the 7.5 percent observed last year — which could lead more sellers into the marketplace.
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That move by current homeowners to enter the market could meet the demand that has already been rising, which will likely lead more sales, the report said. That will likely create a cycle of improvement not seen in some time.
Last year alone, the total number of home sales climbed to 4.2 million, up 6 percent from the 3.9 million in 2011 and the first year-over-year increase observed since 2005, the report said. Of that number, non-distressed property sales accounted for 3.2 million, and that rate was up 11 percent. Sales of new homes rose 3 percent to nearly 300,000.
Further, serious delinquencies continued to improve, declining some 300,000 last year, the report said. Since January 2010, when this type of late payment reached its all-time peak, instances of them have declined by approximately 1 million, and now the rate stands at 6.9 percent. That’s down from 7.4 percent at the end of 2011.
“The housing market enters 2013 poised for further recovery, with improvements in prices, sales and serious delinquencies,” wrote Sam Khater, a senior economist at CoreLogic. “This is an extremely positive development for the economy because the real estate cycle drives the business cycle, and until last year the economy was missing the key real estate residential investment component that drives economic growth.”
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Even as home prices rise, affordability is expected to remain relatively high thanks to ongoing low rates that will make buying a property more affordable than it was in recent years. However, some experts say that the continued recovery of the housing market may prompt the Federal Reserve Board to ease off on its bond-buying efforts earlier than expected.
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