4 Housing Issues to Watch in 2013

What does 2013 have in store for the housing market? With marked gains this year, housing experts expect the housing market to continue to gain momentum in the new year.

The Wall Street Journal recently offered up some chief housing issues likely to be important in the New Year. These include:

  • Inventories rise: To meet the increased demand, home builders are increasing production and more sellers may be more willing to test the market as housing prices increase.
  • Home prices spur demand: More buyers have urgency with home purchases as rents rise, housing values gain momentum, and mortgage rates remain low.
  • Credit remains tight: “While rising prices could serve as a tailwind, new regulations may lock in some of the defensive underwriting posture while impeding capital rules may lead banks to pare their lending footprint,” The Wall Street Journal predicts.
  • Broader economy dictates how far recovery goes: If unemployment decreases and the economy improves, many of the biggest challenges facing the housing market would likely fade, such as tight credit, the large number of underwater home owners, and a high rate of foreclosures.

“Any renewed weakness in job growth could put housing back into the stall that it found itself in between 2010 and 2011,” The Wall Street Journal reports. “The housing market is still fragile. ... If lawmakers can’t agree on a series of spending cuts and tax hikes to avert the ‘fiscal cliff,’ that could crimp demand or damage confidence.”