Real Estate Trends: Past, Present and Future

Since 2008, the economic recession has caused havoc on the real estate market in the United States. House prices dropped, foreclosures increased, lending standards tightened, and home buyer wants changed. The following is a closer look at the real estate trends for 2011, 2012, and 2013.

Real Estate Trends in 2011

Real Estate Trends 2011

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2011 was a challenging year for real estate because so many houses were in foreclosure. This caused overall home prices to drop because sellers with standard listings could not compete against the price of homes in their area being sold as foreclosures, under market value.

Mortgage rates hovered just under 5 percent, which was slightly higher than in 2010, but mortgage rates definitely were not discouraging people from entering the real estate market. However, lending standards tightened in 2011, making it much more difficult to get a loan. The minimum credit score rating rose and lenders took a closer look at a potential buyer’s income versus debt situation.

Home builders had a tough year because of high unemployment rates. So many people were struggling financially, that moving into a new home was not on many people’s minds.

Current Real Estate Trends in 2012

Real Estate Market Cycle

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2012 has definitely been a great time for first time homeowners to enter the market because home prices have continued to drop. However, many people in the younger generation are missing out on this opportunity because of the continuation of unemployment or underemployment from 2011. New college graduates have also been having a difficult time finding a job that matches their skills.

Another trend in 2012 is that people are looking for smaller homes. This is true for both baby boomers and first time home owners. Baby Boomers are now at an age when they want to sell their large properties and move into something that is more manageable. The older generation is also leaning towards single level homes because stairs become more and more difficult to face as they age. First time home buyers also tend to look at smaller homes because they are usually less expensive, making it a good place to enter the market.

Expected Real Estate Trends in 2013

Expected Real Estate Trends

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The housing market is expected to improve moderately in 2013 as the economy improves. It will enable recent college graduates to improve their employment situation and move out of their parent’s homes into homes of their own. 2013 still won’t be “normal” for the real estate market because it will take time to make a full recovery, but there should be an overall improvement in real estate trends.

Mortgage rates are expected to begin rising in 2013, which is typical during an economic recession recovery. So, the beginning of 2013 will probably be the absolute best time to enter the market because rates will be at their lowest ever (around 3 percent).

The past few years have definitely not been “normal” for real estate, but the outlook is starting to turn more favorable. What do you think will happen in real estate trends?

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