What will this year bring? What’s happening now…and what does it mean? We’ve got the answers you need—all wrapped up 13 predictions about topics that will matter in 2013!
1. Stable energy and commodity prices—Energy and non-food commodity prices appear to be holding fairly steady. There may be small blips of changes, but energy (and transportation) prices shouldn’t spike in the coming year. That’s good news for the overall economy, as it continues to grow.
2. Low inflation—Stable energy and commodity prices will help keep inflation in check. That’s good news for Bonds, since inflation is the archenemy of Bonds. And anything good for Bonds is also good for home loan rates. After all, home loan rates are tied to Mortgage Bonds.
3. Interest rates low for a long time—The Fed is buying $85 Billion a month, which helps keep interest rates low. Even when the Fed starts winding down its holdings, it will do so slowly and transparently—so there isn’t a fear of a huge spike in the near future.
4. Consumer sentiment is improving—This indicator has come a long way. Better yet, there is still room for improvement in sentiment, so we should continue to see improvement. That progression looks steady but solid, meaning that consumers are less concerned about the direction of the economy and are ready to move forward.
5. Labor market slowly healing—There are a lot of demographics and statistics that look good for employment in the coming year. That doesn’t mean we’ll see a huge growth in jobs or decrease in the unemployment rate, but the trend is moving steadily in the right direction. It’s not where we want it to be, but it’s much better than it was…and it looks to continue improving
6. Corporate sector is rocking—Profits for the Stock market have been spectacular. That means there is money ready to be spent,which is a good sign for economic growth.
7. Net worth is up—The increases in the Stock market (combined with improving home prices) have helped improve household net worth…which is on its way back to where it was before the recession. That means consumers are feeling better about their financial situations, which leads to feeling more comfortable making purchases again—and that’s good for the economy as a whole.
8. Europe looks better—The bottom line is that Europe has cauterized its wounds. That doesn’t mean there won’t be some hiccups or that Europe’s economy will quickly grow, but it does mean that the big concerns of the past couple years should be under control. That’s good news for the global economy, including the U.S. economy, which depends on Europe for trade.
9. Auto sales are fantastic—Auto sales have been doing better over the last couple of years…and are in a solid position. That position is due to auto manufacturers being lean and ready for growth. In addition, consumers who have been holding on to older cars for years are beginning to make new purchases. That’s good for jobs and the larger economy.
10. Housing prices on the rise—The average house price has returned to normal, when compared to long-term numbers. That means housing prices have bottomed out and are even starting to rise in many areas. There are still dips in different seasons or different markets, but the overall trend is improving—and should continue to improve in 2013.
11. Home inventories falling—The number of new homes sitting on the market has come down dramatically. In addition, fewer homes have been coming on the market. The number of existing homes on the market has also dropped dramatically. The bottom line is that the flood of homes on the market has been cleaned up over the last couple of years, and the market is in a much more stable position.
12. Housing starts and sales are up—The good news in home inventories clears the way for new homes to be built again. That’s
good news for the labor market and for people ready to move into a new home. And we can see those elements playing out in the improvements in the number of home sales. This trend should continue in the coming months; however, different markets will experience different levels of improvements. That said, there are still a number of people who are working on improving their credit scores or saving up for a down payment. Those people may continue renting in 2013, but may be positioned to enter homeownership in 2014.
13. Lending loosening up—Lending peaked in 2008 and then dropped dramatically as lending restrictions tightened. In recent months, however, lending has begun to loosen…and should loosen slightly more in the coming year as balance sheets are cleaned up, more people have down payments saved, and more people enter the labor force. It’ll be a slow process, but it’s heading in the right direction.
The bottom line is that the U.S. has been slowing but steadily climbing out of the recession. This looks to be the year when the recovery final takes hold in such a way that more Americans will begin to feel it.
That’s good news for the economy, for consumers, and for the housing market in 2013.