It looks like home prices finally hit bottom in 2012, so now what? Buyers increasingly expect home prices to continue to rise in 2013 and many are showing a sense of urgency. If 2013 is the first year since 2006 that prices ended up, we might see the beginning of equilibrium in the housing market.
In most of the nation, every single indicator is giving a thumbs up signal: inventory is falling, affordability is near a record high and household formation is up. Rents are rising in many markets, encouraging renters to buy and in some cases they can buy for a lower monthly outlay than renting. Investor demand for housing is up as they seek better returns for their money.
Rising prices could eventually encourage more sellers to put their homes on the market, fueling demand even further. Why? Sellers have to live somewhere, often they are up sizing, down sizing or moving for retirement, all of which they put off waiting for higher prices. So many if not most sellers are buyers as well.
What's the catch? Well, the folks in Washington aren't helping matters. Buyers and sellers want economic stability when they go to the market; "Fiscal Cliffs" with the uncertainty about what Congress might do, if indeed they do anything at all, doesn't help the economy or the housing market.
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