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Top 10 Real Estate Predictions for 2013

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Home Prices Rise
Housing Prices Rise

Home prices have been predicted to increase ever since the housing slump began in 2005, but it will be a reality in 2013.

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After years of falling prices, many areas of the country will experience rising home prices as the economy struggles to recover. This will happen, in part, based on purchase offers made by cash buyers. That's because buyers who rely on financing are at the mercy of an appraisal. An appraiser will choose similar types of homes in the same condition and location that have sold over the past 3 months.

Appraisers, as a general rule, do not apply premiums for market conditions. The appraisal is matched to the last comparable sale. This prevents price increases. How can a home value go up if it will appraise only at the amount of the last comparable sale?

Until recently, cash buyers often received a discount for paying cash. A cash buyer could beat out a first-time home buyer who is utilizing financing to purchase. In the case of multiple offers, cash buyers will overbid and pay above market value because they are now in competition with other cash buyers. It's those cash buyers who will push up prices because there is no appraisal required with cash.

At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.

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