U.S. home prices will likely continue rising in 2013, according to the latest round of predictions from Freddie Mac. The government-controlled mortgage giant expects the U.S. house price index to rise by 2% to 3% in 2013.
On December 11, 2012, Freddie Mac published the latest installment of their U.S. Economic and Housing Market Outlook. The monthly report compiles economic data from a variety of sources and makes forecasts based on that information. According to the latest report, all major house price indexes (HPIs) are now showing year-over-year price gains. They cited 4.5% appreciation reported by the Federal Housing Finance Agency as one example.
But it was their housing market predictions for 2013 that made headlines. The economists at Freddie Mac expect U.S. home prices to climb by up to 3% next year.
Price Trends Vary Widely at Local Level
It should be noted, this was a national prediction that averages home prices across the country. We have seen a significant amount of price variation at the local level in recent years, and this will likely continue through 2013. Some cities (like many in California) will appreciate steadily over the coming months. In fact, some may see double-digit gains in home prices. Others will remain stagnant or experience only modest gains.
Inventory was a key factor for the cities that fared well in 2012. For instance, the number of homes for sale in Sacramento, California dropped by 60% over the last year or so. That was the largest reduction of any of the 146 metro areas tracked by Realtor.com. As a result, the median list price in Sacramento shot up by 31% over the last year (another national record).
But here again, there is much variation in local housing markets. While the median list price was skyrocketing in Sacramento, it was plummeting in Peoria, Illinois. This is why it’s so hard to define ‘the’ housing market in national terms.
Since the housing crisis began, we have seen increased regionalization of home prices. Local housing markets move to the pulse of their own economies, with less influence from national trends. As an example, home prices in Phoenix rose by 20% over the last year or so, while dropping by -2.3% in New York City. Different markets, different pricing trends.
How to Research Home Values in Your Area
Home buyers should research housing conditions at the local level, before plunging into the market. National news is interesting, but it’s not very useful for someone concerned with home prices in, say, Boise or Tallahassee. So where does one turn for local market information? Here are some tips.
If you happen to live in or near one of the cities tracked by the S&P/Case-Shiller Home Price Index, you’ll find it useful. The Case-Shiller 20-city composite monitors home values in the following metropolitan cities: Atlanta, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, Las Vegas, Los Angeles, Miami, Minneapolis, New York, Phoenix, Portland, San Diego, San Francisco, Seattle, Tampa, and Washington, D.C. It shows month-to-month changes in home prices, with a two-month lag time.
But what if you don’t live in one of those 20 cities? There are other ways to research local real estate trends.
The National Association of Realtors (NAR) publishes median home price information for 149 metropolitan areas in the U.S. It takes the form of an interactive Google map with clickable icons. Just Google “NAR median area prices” to find it, or use the URL below.
The full URL for the map: