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Latest Market Analysis – July 2013

Modest Increase in Home Prices Is Expected in 2013 – Article


With the California median home price in 2012 surging by double-digit from 2011, there are concerns about the market entering into another period of housing speculation.  Discussions on whether the current housing market recovery and the recent asset price boom are justified surface from time to time and the debate will continue in 2013.  What is clear from evidence suggested by surveys and research studies, however, is that current conditions for the housing market and for real estate financing are healthier than the environment that we observed in the mid of 2000’s before the housing market started deteriorating.
   The environment for housing finance in 2012 required home buyers to be more responsible financially than they were in 2006.  Recent home buyers had more “skin in the game” than many of those who purchased a few years ago when the housing market was at its peak. In general, more buyers were putting a bigger down payment on their home purchased, while there were fewer buyers with zero down payment.  The share of buyers who used a second lien to finance their property also shrank significantly from the peak of the current housing cycle, and those who opted for an Adjusted Rate Mortgage (ARM) took a dive from the mid of 2000’s. There were also more buyers offering all cash to pay for their house in 2012, as cash buyers in the current market made up nearly three times what it was in 2006.


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