Housing Market Forecast for 2013

Will the housing market be stronger in 2013? It is best not to wait for housing market predictions and get your house ready to sell now.

Q: I live in Atlanta and love listening to you on the radio. Do you think it is better to put a house on the market now or wait until spring? It is my mom’s house that I’m thinking about and she recently moved into an assisted living facility.

She doesn’t “need” the proceeds from the sale immediately to fund her living expenses and I could wait a couple months to sell, if you thought that could mean several thousand more dollars – in a hopefully stronger market or better time of year for home sales like Spring or Summer.

Then again, every month that goes by there are costs associated with owning her home i.e. utilities, taxes, etc. She paid cash for it and doesn’t have a mortgage. I’ve read various opinions online and would value yours.

A: Here’s the bad news: There’s probably no way you’d recoup the expenses you’ll shell out over the next few months while you wait to sell your mom’s home. In most real estate markets, home prices aren’t appreciating at a rate high enough to cover the cost of the expenses you’ll incur for the utilities, taxes, insurance and upkeep on the home – if they’re appreciating at all, which is not a sure thing in every neighborhood.

Plus, it’s tough to keep a vacant house from sprouting problems, which could turn into expensive fixes if someone isn’t there to keep an eye on them.

Some real estate markets depreciated so quickly and so dramatically that real estate investors have come in bought up huge swaths of properties and are now bringing life back into those markets.

If a particular real estate market dropped 70 percent and there are now bidding wars for homes coming onto the market, you could consider selling now or hope that the market continues to rise over the next several months and get even more.

In general, we think it’s gambling to try to time the bottom or the top of a market. If it works, you’re lucky, but most people miss the top or the bottom.

Consider this, if economic circumstances change for the worse and you could have sold now, you’ll regret not having sold. On the other hand, if the housing market has leveled off and things don’t change much, you will have incurred expenses on holding the home that will reduce the amount of money you get out of the home. So you’d basically be gambling that circumstances will improve quite a bit to not only cover the expenses for the home but that you’d actually make quite a bit more money in the spring market over closing the sale in the next several months.

Here’s how the numbers play out. Let’s say it costs you $500 per month to cover your mom’s expenses, a number that is low but that makes the math easy. That’s $6,000 per year. If the house were worth $100,000, you would need about an 8 percent appreciation or about an $8,000 increase in the price of the home in order to break even on the expenses. That’s because when you sell your home at a higher price, you’ll probably pay a higher commission on the sale of home and may have other expenses on the sale that are tied to a higher purchase price.

We’d guess is that most homes in the Atlanta metro area won’t appreciate at that level this year or perhaps even next year.

Are there many foreclosures in the area where your mom’s home is located or are many homeowners in that area underwater on their mortgages? If so, it could be quite some time before your mother’s property appreciates at a level that would outpace the expenses on the home and the cost to you of caring for another real estate property.

Our general advice, and it applies in your situation, is that you should fix up the property and get it ready for sale, then list it so that you can take advantage of all the serious home buyers who are out and about during the holiday season. If it doesn’t sell, you should make sure you’ve got the home priced right, and that the broker is onboard with an aggressive marketing plan, and try to make the most of the stronger spring selling season.


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