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Pre-bubble, the normal appreciation in real estate is 3.6% a year.  During the bubble, from the first quarter of 2000 to the second quarter of 2006, appreciation shot up to 10.4% on an annual basis – triple what it normally would be.  Well obviously, that was an anomaly.  What happens after an anomaly?  A correction.  So during the bust, the third quarter of 2006 to the second quarter of 2012, prices dropped on an annual basis of 5.7%.  And that got us through 2012.  But according to Home Price Expectation Survey, those hundred analysts, prices over the next couple of years are going to go back to a 3.3% appreciation on an annual basis.  You can see looking at the chart, that we are almost back to normal numbers – pre-bubble numbers. ~ Courtesy of KCM Crew

Michele Herndon, PA, SFR, CLHMS

Michele@TampaAndBeyond.com

813-523-9222

http://www.TampaAndBeyond.com

http://www.ApolloBeachLuxuryHomes.com

At the beginning of the year, a lot of people that like to make their projections on where they think housing is going to be at the end of 2013. Here are a couple of those projections.  JP Morgan thinks that prices are going to be up 9.7 %.  Barclays Capital thinks they are going to be up 5.5%.  Capital Economics says 5%.  Freddie Mac thinks there is going to be 2 or 3% increase in pricing.  Now those are individual entities that are taking a guess based on what their analysis is of the market and the market data as to where prices are going to be at the end of the year.  Let’s not take one group and say they are right or wrong, again there are some that say the prices will flatten and even some that say we will see some depreciation.  Instead of getting all caught up with individual projections let’s take a look at the Home Price Expectations Survey.  Pulsenomics, the company that does this survey, talks to over a hundred of the leading analysts in the country; people who know what they are talking about.  Then they mesh their answers together.  So it is not one person saying, “This is what we think.” Or one organization saying, “This is what they think.”  What they do is they take over a hundred of the leading analysts in the country and say, “What are your guesses going forward over the next few years?”  Then they take all those hundred plus projections and mesh them into one number.  Again, the analogy I like to use, if we had a jar of jelly beans in the front of a room of a hundred people, and asked each to guess how many were in the jar, some would guess way too high, some would guess way too low.  But if we asked all hundred people to guess and then we averaged out all of their answers, we would come up with a number real close to the number of beans in that jelly bean jar.  That is what the Home Price Expectation Survey is.. They take over a hundred opinions and mash them into one number. ~ Courtesy of KCM Crew

Michele Herndon

813-523-9222

Michele@TampaAndBeyond.com

http://www.TampaAndBeyond.com

http://www.ApolloBeachLuxuryHomes.com

Another thing that is still pretty exciting especially with prices now starting to show on a national basis, some increase, is the return on investment of real estate compared to other investments like the Dow, the S&P, and the NASDAQ.  Now after the fiscal cliff has been averted, we are going to probably see some jump up in the DOW, the S&P and the NASDAQ next month.  But we can still see – if we go all the way back to January 2000 and compare it to January 2013, thirteen years later we can see that the investment in real estate, still in this country through those crazy times was better than investing in any of the stock market pieces.  Long term, real estate has always been a great investment. ~ Courtesy of KCM Crew

Michele Herndon

Michele@TampaAndBeyond.com

813-523-9222

http://www.TampaAndBeyond.com

http://www.ApolloBeachLuxuryHomes.com

Home affordability, price versus interest rate is really in a beautiful place for people.  You can see that, again, prices whether it be the ten-city composite or the twenty-city composite, are bouncing along the bottom here.  They are no longer in freefall.  Again, in most of the country right now, we are going to see some nice price appreciation over the next year.  ~ Courtesy of KCM Crew

Michele Herndon

813-523-9222

Michele@TampaAndBeyond.com

http://www.TampaAndBeyond.com

http://www.ApolloBeachLuxuryHomes.com

The biggest challenge in most parts of the country is inventory.  We show you this chart every single month, the month’s inventory of homes for sale from the NAR existing home sales report.  A normal market is that yellow line going across.  That is five to six months.  As you can see over the last two years, the inventory was well above normal levels.  That said, it was a buyer’s market.  There was too much inventory for sale compared to the amount of demand there was for the inventory.  Pricing is all about supply and demand.  Supply was way up and demand wasn’t.

Well demand is starting to increase and at the same time, inventory is decreasing below normal levels in many parts of the country.  As a nation overall.  What does that mean?  Well is demand is up and supply is down, prices are going to go up and that is exactly what has taken place.  One thing we could see in 2013 that could be a challenge to the market maintaining it’s momentum is a lack of inventory.  ~ Courtesy of KCM Crew

Michele Herndon

813-523-9222

michele@tampaandbeyond.com

http://www.TampaAndBeyond.com

http://www.ApolloBeachLuxuryHomes.com

Welcome to 2013.  We believe very strongly that 2013 is not just going to be a good year, it is going to be a phenomenal year.

Looking back twelve months now, we see again that there is a tidal wave of people coming into the real estate home ownership field.  It is now time because of home affordability, interest rates being where they are, prices being where they are and people starting to project increases in both, they are jumping in and saying, “You know what? Now is the time for me to be a homeowner.”  ~ Courtesy of KCM Crew

Michele Herndon

micheleherndon@me.com

813-523-9222

http://www.TampaAndBeyond.com

http://www.ApolloBeachLuxuryHomes.com