Where are we headed? The Real Estate Market 2013 and Beyond

If you missed the National Association of REALTORS® (NAR) Midyear Meetings in Washington DC, then you likely missed Lawrence Yun, Chief Economist for NAR, sharing his vision for the future of the real estate market.

Here are a few highlights from Yun’s presentation which paint a picture of what the current real estate market looks like and what we can expect to see in the next couple of years:

Inventory is at historical lows. Existing real estate inventory is bouncing along at 13 year lows, while newly constructed homes inventory is at a 50 year low. It’s no wonder we’re hearing from Smarter Agent mobile app users that properties for sale are receiving multiple offers and often selling for above asking price.

Household formation is up. Approximately 1.1 million households were formed in 2012, up from just 600,000 in 2010. The number of households formed in 2013 is expected to exceed 1 million. These new households are likely accounting for much of the demand our app users are seeing in the market.

More and more renters are qualified to own. NAR estimates that 51% of current renters have the income necessary to buy a median-priced property. This segment represents a huge number of potential homebuyers over the next few years.

Existing home sales to rise. In 2013, sales are expected to rise close to 10%, from 4.66 to 4.97 million. This jump makes sense given the tremendous growth in household formation.

Home prices to rise. In states like California, Florida and Nevada, states hardest hit by the foreclosure crisis, prices are expected to rise between 4.13 and 8.75% in the next 12 months.

What are your thoughts on the future of the real estate market? Do you think we will see prices rise? How about interest rates?

Let us know in the comments below.