Housing outlook 2013. Image by NapaneeGal via flickr.com

While many markets are slowly but surely shrugging off the recession, several are still facing a rocky road ahead and it may be some time before we see a return to ‘normality’. So without any further ado, here’s RealtyBizNews’ lowdown on the worst housing markets to watch out for in 2013:

Detroit, Michigan

Sorry, no prizes for guessing who’s in the sorriest state – Detroit remains by far and away the sickest housing market going into 2013, even though it has shown some signs of improvement. While some might be encouraged by the 22% increase in home prices last November, the fact remains that Detroit’s housing landscape was hit by a ton of bricks during the crisis – and it will take a long time before it picks itself up.

Real estate prices in Detroit slumped by an average 60% during the housing crisis, and to this day foreclosure rates remain sky high – so much so that some of its homes continue to fetch prices as low as $1.

A sign of the times in Detroit… Image by dharder9475 via flickr.com

Fort Lauderdale, Florida

While the signs are that Fort Lauderdale’s pitiful housing market may have bottomed out in 2012, the city is being held back by an enormous backlog of foreclosures – Florida accounts for the third highest foreclosure inventory in the US, and many of them can be found right here. It’s likely that this oversupply will continue to dog Fort Lauderdale’s recovery prospects for some time to come.

On the up side, there are some positives – home sales rebounded by 14% between September and November 2012, while prices rose by 20% during the same period. Fort Lauderdale might just be entering its recovery period, but it will be a while before the situation normalizes.

Palm trees are about the only thing seeing positive growth in Fort Lauderdale at the moment. Image by wallyg

Miami, Florida

Miami is something of a special case, with a huge spate of foreign buyers taking advantage of its crippled market to snap up its luxury real estate on the cheap. This has even led to talk of a possible bubble, although the prospect remains slim given Miami’s pitiful job market at present.

The poor unemployment rate means that Miami is still seeing a steady flow of delinquencies and foreclosures, with more than 24,000 homes in the process of being repossessed by banks, according to Trulia’s latest figures.  Until Miami can sort out its job situation and address the foreclosure rate, its market will continue scrape along at the bottom.

Miami’s housing outlook remains uncertain heading into 2013 © kenzo – Fotolia.com

West Palm Beach, Florida

Florida’s nightmare extends to West Palm Beach as well, where one in 349 homes was foreclosed upon last July.

West Palm Beach’s foreclosure rates are, sadly, fairly typical for Florida and can be taken as a sign that it’s still feeling the effects of the housing market crash. This is evident in the market’s continued volatility, with home prices continuing to fluctuate wildly. Sales prices fell by almost 15% between June and July, in spite of a general improvement in overall sales numbers. We can expect more of the same during the next 12 months.

West Palm Beach’s homes are looking good, but only from up here.. Image by Captain Kimo via flickr.com

Cape Coral-Fort Myers, Florida

There’s not much going on in Cape Coral either at the moment. The only bright spot to speak of has been the rise in new construction permits, which indicates that building activity might be about to pick up. Even so, no new major developments have got out of the ground just yet, so it will be a while before this has an impact on the market.

Cape Coral’s biggest hurdle – like most of Florida – remains its depressing foreclosure rate. So bad was the area hit that it’s now possible to go on a tour of the city’s foreclosure-hit neighborhoods, which the New York Times says have seen massive drops in property values.

A tour of Cape Coral’s foreclosures isn’t for the feint of heart. Image by ifmuth via flickr.com

© art1art – Fotolia.com

Luckily for us, Trulia has our backs, rounding up a list of what it reckons to be the healthiest real estate markets in the country going in to 2013. Today we take a look at the top five markets, showing how essential factors such as home prices, home sales, employment and foreclosure stats are affecting each one.

1: Houston, Texas

Pretty much the entire state of Texas is riding a wave of steady growth at the moment, with several of its cities showing up on Trulia’s list of improving markets. Chief among them all though is Houston, whose market has been given a huge boost by one factor above all else – jobs, and lots of them.

Job growth has helped to propel the demand for housing in Houston, resulting in the city’s inventory falling to a ten-year low last October, whilst condo and townhouse sales jumped by almost 41.6% compared to one year ago. Even better, according to RealtyPin.com, the fact that Houston has plenty of job opportunities and foreclosures have all but dried up means that the city is unlikely to be hampered much by the fiscal cliff.

Strong job growth in Houston’s energy sector is driving real estate © Paul Wolf – Fotolia.com

2. San Francisco, California

The healthy state of San Francisco’s real estate market was confirmed recently by a report from the Urban Land Institute, which forecast the Californian city would be number one in the country for investment, development and house building in the New Year. Supposing we do see more investment and development as the experts predict, San Francisco is likely to see further demand for housing and yet more price increases.

Other statistics backing up San Francisco’s positive outlook include rental prices, which have jumped by more than 15% over the last year, according to the SF Examiner, and housing inventory falling by more than 40%. Finally, an explosion in the number of tech-related jobs won’t hurt things either.

San Francisco is set to be No.1 for real estate investment this year © Andy – Fotolia.com

3. Bethesda-Rockville-Frederick, Maryland

The driving force behind the Bethesda area’s notable 3^rd place is foreclosures – or rather, the complete lack of them. Its market currently has one of the lowest foreclosure inventories of any city in the nation, which, coupled with strong growth in its jobs market means that it’s one of the most promising areas around as far as real estate is concerned.

Bethesda currently boasts an extremely low foreclosure rate of just 2.7 homes per 1,000, while its vacancy rate has fallen to just 1.2%, as of November 2012. Nearby, Washington DC is also seeing a strong recovery, further bolstering Bethesda’s own prospects for 2013.

Foreclosures are virtually non-existent in sleepy Bethesda. Image by eddie.welker via flickr.com

4. San Antonio, Texas

The fact that San Antonio’s housing recovery is outpacing that of pretty much every other metro area in Texas shouldn’t come as a surprise, not when you consider that the city actually fared much better during the real estate crash than most others. In fact, San Antonio seemed to be in a league of its own during the recession with average home prices actually increasing while cities all around it crashed and burned. Now that things are picking up across the state, it looks like San Antonio could be the one to lead the charge.

San Antonio’s strong recovery is helped somewhat by the fact it never needed to ‘recover’ in the first place! © jovannig – Fotolia.com

5. Austin, Texas

Austin has seem huge gains in the number of home sales over the last year and a half. In fact, last November saw the city score an impressive 18 months of gains in its overall home sales volume. Also helping Austin is that it remains one of the best seller’s markets in the country, with homes valued at $200,000 or less typically selling in three months or less – much faster than most other parts of the country.

Austin, TX., has seen 18 months of increasing sales volume heading into 2013 © Brandon Seidel – Fotolia.com

US property investment sector set to see growth. © Maxim_Kazmin - Fotolia.com

The article in SF Gate quoted Melton as saying that the easing of investment policies was sure to lead to an influx of capital from China into overseas markets, spurring investments in both the Asia Pacific region and the US. Melton also claimed that the Chinese government’s restrictions on its own overheated real estate markets would add further incentives for Chinese investors to seek new opportunities outside their own country.

Further encouragement for the prospect of increased Chinese investment in the US comes from Congress, which is actively seeking ways to attract foreign investors. One of the ways in which Congress is attempting to do so is by offering five-year temporary residence visas for overseas investors who buy a home in the US for $500,000 or more.

Melton claims that the real estate sector is set to change rapidly in the near future. We can expect to see more investors interesting in building up real estate portfolios as opposed to just making one-off deals, something Melton claims will bear fruit in the next couple of years. For real estate agents and brokers, they should look to make the most of the opportunity by positioning themselves in property investments ahead of the curve.

Housing Predictor expects many markets to appreciate over the next 12 months. © Sean Gladwell - Fotolia.com

The predictions reveal that US housing markets are in for something of a revival, with inflation expected to be seen in the highest number of local markets for four years. While the economic outlook remains grim, real estate markets in fourteen states are forecast to appreciate over the next 12 months, a sign that many are finally beginning to stabilize after years of decline.

However, with the number of markets expected to experience deflation outweighing those which will grow, it’s clear that things will be far from rosy in 2012.

Altogether, Housing Predictor has made projections for 230 housing markets across America’s 50 states.

The forecast for the best housing markets in 2012 shows that a wide cross-section of US cities are predicted to do well, something that lends weight to the argument that local economic and political factors have the biggest say in local market’s performance, rather than national factors.

Kansas City leads the way according to Housing Predictor, with a 5.8% appreciation forecast in its local housing market, thanks to a strong demand for agricultural products such as soy beans and corn.

West Virginian markets are also expected to do well next year, with three of its cities landing in Housing Predictor’s top ten. This is thought to be due to the affordability of homes in the state, which is attracting thousands of newcomers from elsewhere.

For more information, check out the top 25 best housing markets on the Housing Predictor website.

NAR admits to 'over-estimating' existing home sales data. © Patryk Kosmider - Fotolia.com

The NAR has now advised that it will start revising four-years worth of sales data downward, beginning next week. The bad data has been attributed to a statistical error in its software that resulted in some home sales being counted twice.

Lawrence Yun, chief economist at the NAR, explained that the association used the Multiple Listing Service (MLS) to track existing home sales. However, he pointed out that the MLS database is limited to data from sales listed by realtors only. Sales of homes listed by owners are excluded from the database, and so the MLS only provides a narrow view of real estate markets. He also pointed out that because the majority of homeowners use realtors, sales figures for realtor listed homes became artificially inflated.

Also, the NAR often made a number of assumptions each month, based on data from the 2000 Census, which is clearly outdated.

The NAR has yet to reveal how big the revision to its existing-home sales data will be, but Mr. Yun did say that there is likely to be a “meaningful” decrease in the numbers, and that the new revision would show that the housing market downturn was even worse than previously thought.

The bad data is particularly concerning because the US economy is so closely linked to the fortunes of its real estate markets, and real estate policies followed by both Congress and the Federal Reserve have been based in part of the NAR’s existing sales data.

The same hold’s true for many other business sectors. Marketing, advertising, any communicative business out there has great incentives to do more than pay lip service to social channels, email, conventional advertising, and so on.

The image of a father, his wife and kids looking over his shoulder as he sits at the PC, all gazing gleefully at that future home – the potential streaming out of their eyes – gleaming dreams of home ownership, the family dog running around the picketed fence yard – this is a nice fantasy. But, for most of your websites (yes, you reading this) no sooner have Bob, Carol, little Ted, and infant Alice landed on your site, than disgust or disinterest have sent them surfing away to someone else’s. The same holds true for your Facebook and Twitter, to say nothing of your cookie cutter direct mail outreach. There you sit, Jack on the rocks in hand, spending the proceeds of last year’s commissions at the 19th hole – wondering, assured even, that the good times will roll again. Unfortunately, it ain’t happening.

Take a look at the infographic courtesy HubSpot below. Try and integrate the reason contained within, into your marketing (yes agents need to do marketing) schema. Come on, what else have you to do? The phone cannot be ringing off the wall.

In our experience, not only have agents failed to engage adequately via the web channels, but when they do reach out, it is often with the wrong tone or mechanism. As the graphic suggests, it’s not mechanized marketing clients mind, it’s the lack of value, the lack of human element, the incorrectness they see. Getting “good” and useful information is never a bad thing, people thrive on their need to know. Unfortunately, the real estate industry is one of the worst in the world for professionals “glued” to antiquated ideas of business.

In summary, in order to survive these difficult times, professionals have to think inside and outside the proverbial box all at once. This only makes logical sense, just like our cool graphic shows – tried and true, meets the dynamic world of real time interactions. Are your channels all clear? Or do your customers need tin foil and rabbit ears to pick up your grainy signal? It’s the 21st Century peeps.

Top image courtesy © James Steidl – Fotolia.com

Economists predict housing markets to improve in 2012, if only slightly. © Stephen VanHorn - Fotolia.com

The financial information services firm Fiserv for one, has predicted better things for the New Year. It said that it expected 95% of metro areas in the US would see average home prices rise during the next 12 months.

Numerous economists and surveys carried out in recent months have projected modest increases for US housing markets through 2012. Following years of rising foreclosures and price decreases, even a small improvement would be seen as a good sign, according to many real estate professionals. One recent survey by MacroMarkets, which questioned 100 real estate professionals and economic experts, showed that its respondents believed the New Year would see modest price increases of around 2.5%.

Still, we do have numerous problems to contend with of course. The huge backlog of foreclosed homes still has to be processed in many US markets. Because of this, home value gains will probably be in the region of around 1.1%, according to MacroMarkets. Nevertheless, this is a big improvement on the predicted 2.8% decline in median home prices in 2011.

The biggest problem facing housing markets, according to economists, is that foreclosures are still weighing very heavily and dragging them down.

Mark Fleming of CoreLogic was optimistic for the future however:

“The water is very deep in the living room, but it’s no longer getting deeper and is starting to recede.”

One thing that is expected to help real estate markets in 2012 is the current low interest rates that are available. Coupled with there being more affordable housing available for middle income families, economists predict a very modest rebound over the next year.

Backlog of distressed homes slowly clearing up. image courtesy of 3rdStLA

Speaking to Bloomberg, RealtyTrac’s vice president Rick Sharga said that:

“This is a glimmer of hope that lenders are getting more realistic. It’s a win for borrowers who avoid foreclosure, buyers who get a house in better condition and banks that lose less money, which is also a win for taxpayers.”

The increase in the number of short sales is a key indicator that distressed properties are finally being cleared from the market more efficiently, pointed out RealtyTrac.

Over the second quarter of this year, homes near to foreclosure amounted to 12% of the total number of residential property transactions, and banks agreed to a larger number of deals on properties which were priced below the outstanding mortgage balance.

Image courtesy of RealtyTrac

More encouragingly, the average time it took to sell a pre-foreclosure home also decreased, taking just 245 days instead of the average 256 days reported in the first three months of 2011, reported RealtyTrac.

Short sales or sales of homes in the process of going through foreclosure sold for an average discount of 21% – $192,129 on average – when compared to non-distressed property sales.

RBI raises repo rate twice what was expected

The massive selloff today stands to hurt key sectors of the India economy including; real estate, banking, auto and other capital goods sales, and in the long term – some believe, the overall recovery. Four key bank stocks, HDFC ,  HDFC , ICICI Bank, and  SBI lost a huge percentage of the total Sensex fall.
Already, the real estate sector is a buzz over a hike that will further exacerbate the situation there. Poor sales and high input costs have already dampened the property market of India, and RBI’s unexpected extra hike points will only make things worse. Pradeep Jain, Chairman of the Confederation of Real Estate Developers’ Association of India (CREDAI), told reporters:

“Unless steps are taken to improve supply system, this increase by RBI is going to have a minimal effect on inflation. While we were expecting a moderate hike of 25 bps, the 50 bps raise is going to dampen growth. This will make cost of funds expensive for both developers and buyers, coupled with constant increases in input costs, making the business environment very complex across industries.”

The bottom line here is, residential buyers are going to be hit hardest by these rate hikes. This is bad business where sales are concerned. The margin for smaller banks is going to be even worse, and cities where purchase rates and prices are highest will be hit hardest. Workers just able to float loans across India, will now be shut out. So, while RBI may recoup margin at one end, a massive loss overall could take place. RBI’s hike only makes sense if the overall market – mid to long term – recovers.

Lalit Kumar Jain (right),  National President CREDAI, pointed out that the needed housing development funding for the next few years there in India, exceeds $3.2 trillion dollars US. In effect, RBI’s move may have far more dramatic ramifications than even experts predict. This is a case of too much, too soon for many.

The Reserve Bank of India (RBI) has basically used a shotgun to kill the mosquito of inflation here. Now, asset quality may further detirorate  as sensitive sectors respond to this unexpected twist. Commercial real estate, for one, is particularly subject to over scrutiny and key quality issues.

Most Indian banks showed a decline in net interest margins in their June earnings statements, and this is one huge indicator of profitability for banks. RBI’s move would seem to be putting the squeeze on many banks and other lending institutions there. While most banks do not fear for the long term, almost all suggest the market will become compressed over the short term. We will have more as the news comes in.

We leave you with

One the capital of the vast Inca empire - Cuzco sees a resurgence

According to the report, Peru sits beside, Hong Kong, Singapore, and Brazil where superb real estate opportunity exists this year. Real GDP growth is one of the definitive factors used in determining potential, and Peru grew at a rate of almost 9% in 2010. Domestic consumption there, combined with exports and overall confidence, have resulted in what amounts to a “mini-bull” market there. While high prices do detract from the outlook, all other indicators show a very positive outlook for Peru through 2012. A Cushman & Wakefield (see also rates graphic below) research paper also supports the Research and Markets data here (PDF).

Lima rental data from Cushman & Wakefield

Of particular interest, the office property market seems to be on the rise after dismal performance in the midst of the recession. Class A space is on the rise to meet the growing demand there now. As raw materials and high value products gain a foothold, the domestic industry will grow accordingly. Industrial production in Peru, will certainly drive the housing market into an incline, but no numbers or projection have been released as of this report. Manufacturing output is estimated to be at or around 10 percent so far this year, which would correspond to a 9 or 10 percent growth for domestic real estate.

A Cosapi facility in the heart of Peru - courtesy their website

Consumer spending, the fuel of any economic surge, is on the upswing throughout South America, and in Peru in particular. Number 1 in Latin America where improved business regulation, according to a report by the International Finance Corporation and the World Bank, Peru surged forward 10 spots on the list of world economies.

The list of companies mentioned in this detailed report include; Abengoa , Cemento Andino SA, Cementos Lima, Cementos Pacasmayo, Centros Comerciales del Peru (CCPSA), Cosapi (factory image above), Graa y Montero (GyM), Los Portales SA, and Inversiones Centenario, among others.

Pedestrian shopping zone just off the Plaza de Armas in Lima - courtesy Eddie Rossi

Finally, China investment and other dealings with Peru would seem to have had a significant impact on that economy too. Currently China has moved into second place behind the US in trade with Peru. For Latin America, the emerging economies of Peru and her neighbors are certainly a long awaited event.

For more information on this news, the reader is encouraged to read the original Businesswire press release here, or visit the Research and Markets site here.