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Outlook For The Housing Market Looks Promising For 2013

lindspicAs we approach the New Year, there seems to be a lot of optimism over the housing market and the homebuilding industry. CNN Money recently reported: Barclays Capital put out a report recently forecasting that home prices, which fell by more than a third after the housing bubble burst in 2007, could be back to peak levels as soon as 2015. "In our view, the housing market had undergone a dramatic over-correction during the prior five years, resulting in pent-up demand for housing purchases that would spark a rapid rise in housing starts," said Stephen Kim, an analyst with Barclays, in a note to clients. CNN Money also reported that construction is expected to be even stronger, with numerous experts forecasting home construction to grow by at least 20% a year for each of the next two years. Some believe building could be back near the pre-bubble average of about 1.5 million new homes a year by 2016, about double the 750,000 homes expected this year. "We think the recovery is for real this time around," said Rick Palacios, senior analyst with John Burns Real Estate Consulting. "If you look across the U.S. economy right now, there are only a handful of industries looking at 20-30% growth over the next 4-5 years, and housing is one of those." The Wall Street Journal reported that "Home-price forecasts for 2013 are on the rise. J.P. Morgan Chase & Co. expects U.S. home prices to rise 3.4% in its base-case estimate and up to 9.7% in its most bullish scenario of economic growth. Standard & Poors, which rates private-issue mortgage bonds, on Friday said it expects a 5% rise in 2013. The J.P. Morgan analysts boosted their base-case estimate from 1.5% after a convincing rise in the net demand for housing this year has surpassed 2 million homes for the first time since 2006, said John Sim, a strategist at the investment bank. Net demand is the pace of existing home sales minus the inventory of homes available for sale. Locally, in both New Hampshire and Maine, recent sales statistics support optimism in the housing market. According to the Maine Association of Realtors, "Sales of single-family existing homes in Maine increased by an impressive 24.55 percent in October 2012. According to Maine Listings, 1,177 homes changed hands during October 2012, compared to 945 homes in October 2011. The median sales price (MSP) rose 3.33 percent to $170,500." Tina Lucas, 2012 President of the Maine Association of Realtors, said, we are seeing across the board activityfirst time home buyers, investors buying multi-family properties and higher priced homes selling as well. All categories of potential purchasers are getting into the market while the attractive pricing lasts. I believe that if this continues, as it appears poised to do, it will clearly demonstrate the bottom of the market has come and gone." In nearby Oxford County, Maine, sales of homes were up 10.74% in the most recent quarter, over the same period in 2011. The median sale price was up 16.77%. This would seem to present clear evidence that the housing market has turned the corner in western Maine. The trend of gains in the New Hampshire housing market continued in October, with the largest single-month median price increase in nearly five years, according to data released this week by the New Hampshire Association of REALTORS (NHAR). This is now clearly a trend, said NHAR President John Rice, citing the fact that every month in 2012 has witnessed an increase in unit sales compared to the same month in 2011. We anticipated that increased numbers of sales would eventually lead to upward pressure on prices, and thats what were seeing now.