East Bay 2013 Home Price Forecast

It’s been about a month-and-a-half since I wrote my outlook for the 2013 housing market and it’s already time for a revision.

In a nutshell, I expected home prices to rise in 2013, though not as strongly as in 2012. I expected demand to stay strong, but supply to start to grow as more homeowners finally have enough equity to sell. Just one month in to 2013, Supply is clearly contracting even further. As a result, I wouldn’t be at all surprised to see home prices in Contra Costa and Alameda Counties rocket up another twenty percent this year.

In my previous forecast, I wrote:

We aren’t going to see more REO’s in 2013 than we did in 2012. Foreclosure activity has been lower lately, and with the lag, even if things started picking up now, we wouldn’t see much change in inventory until 2014.

I expect that there will be some gains in both short sales and old-fashioned equity sales. Why? Because we’ve got a huge backlog of people who have been waiting. I don’t think we’ll see a “mad rush to the exit” without some dramatic event, but I do believe more sellers will try and take advantage of recent price increases… especially so if news reports begin to suggest any negativity.

Supply will also grow a little simply because houses will sit and not sell. A home that an investor would have bought a year ago for $250,000 may sit longer on the market unsold for $300,000 in 2013. Housing Supply was SO low in 2012, any increase will be noticed and appreciated.

2013 will also be the year that new home construction returns in earnest. Buyers who aren’t finding much in the MLS may find exactly what they are looking for in a brand new home.

I don’t expect huge changes, but I do think things will get a little better out there for buyers.

Since then, it’s clear that homeowners are, en masse, waiting. A Redfin survey concluded as much:

Redfin Seller Survey 2013 Q1 SellingTimeline 640x285 East Bay 2013 Home Price Forecast

 

With Demand still strong and Supply even tighter, 2013 is shaping up to be an extremely strong year for home prices. Every neighborhood is a little different of course… check out some of Andrew’s recent posts, detailing different areas from around the Bay.

Who knows how far this market will run. At some point, prices will be high-enough for more Sellers to cash out. Maybe we peak this Summer. Maybe next Summer. If this trend continues, it won’t be too long before home prices around the Bay Area reach new all-time highs.

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About Greg Fielding

I am a longtime real estate agent who has pretty much seen it all during the housing boom as bust. With experience in selling high-end property and low-end foreclosures, raw land, short sales, development work, apartment buildings, and working with investors, I bring a well-rounded perspective to my work.I also have started to do some paid real estate consulting. If you have questions or just need some good real estate advice, book an appointment at http://whattodorealestate.com/In addition to selling real estate, my insights have been featured in The New York Times, The Big Picture, and regularly on Patrick.net. I have also done consulting work with ForeclosureRadar.Starting my career, in 2003, I have sold homes throughout Alameda and Contra Costa counties, specializing in Danville, Alamo, Blackhawk, San Ramon, Dublin, Pleasanton, Walnut Creek, Lafayette, and Orinda. I live in Danville with my three kids.


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One thought on “East Bay 2013 Home Price Forecast

  1. Tom StoneTom Stone

    Greg, those higher prices are good for sellers and the tax base, but they are not good for communities in the long run because they are not sustainable without real increases in income. Two homes that were purchased here in sebastopol last week by “Investors” won’t make sense economically without assuming rental income which is not realistic. Where are the real wage increases? Real Estate Bubbles are not good for most people.

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