With real estate finally gaining momentum as 2012 closes, most everyone now, including the most cautious of industry observers, are anticipating a good year ahead, and some are boldly forecasting a bumper 2013.
There’s more than one reason for the prevailing optimism. Going by the year-end figures from the US Census Bureau and the Department of Housing and Urban Development, building permits are up 26.8 percent from last year and are actually at their highest level since 2008. Housing starts are 21.6 percent better than last year. Meanwhile, National Association of Realtors (NAR) reported existing-home sales for November 5.9 percent higher than October and 14.5 percent higher than a year ago.
Contributing to the burgeoning optimism are the latest figures on the new households front from the National Association of Home Builders (NAHB). Before the housing bust, the US was adding 1.4 million new households per year, a number that plummeted to just about 500,000 when housing industry bottomed out. Housing has recovered significant ground since then with the December rate for new households about to breach 900,000. Freddie Mac is especially buoyed by recent developments and is actually predicting between 1.20 million and 1.25 million new households in 2013.
Given these figures builder confidence was expected to improve. However, the real confidence booster is that this is the eighth consecutive month that the figure has risen.
In preparation for 2013, real estate agents should now be advising their clients, both sellers and buyer, on how best to profit from next year’s bounties.
Advice for Sellers
Jettison jetsam. In other words, tell owners to de-clutter the house of the items that have accumulated while they waited for the market to rebound. This includes all the stuff in the closets, the cabinets, and, yes, the attic that you don’t want the buyer to see in the first place. You might also want to suggest owners to sell some items and use the money to augment the down payment or home-staging budget.
Price it competitively. After a proper home staging, advise the seller to price the home competitively (not overpricing and certainly not underpricing), taking into serious consideration the price range of other homes (both on the market and recently sold) of similar condition, age, floor area and plan, and location.
Remodel now, sell later. If your seller is looking at selling later but is ready to remodel now, advise him (or her) to remodel intelligently—that is, to carry out home improvements that have about 80 percent return on remodeling investment. By this metric, home improvement costing $10,000 should boost the home value by at least $8,000. The home improvements that most likely will bring the best home value increases are a bathroom addition, kitchen enhancements, energy-saving window replacements, and new sidings.
Advice for Buyers
Rent, then buy. Despite the much-improved industry conditions, now is not quite the time to buy if you happen to fall in the category of the average home buyer. Rent now with the option to buy the home later but at today’s low prices. Many lease options today let you lock in the home price while you build up your equity.