It's Wednesday, and we now officially have less than a week before Christmas, and less than two weeks before we ring in the New Year! My does time fly. So what will our local real estate market look like for 2013? There are a few key factors that will play an important role in the continued stabilization of the market.
Who's on The Job?
The unemployment rate is certainly a critical factor in whether or not our real estate market will continue to grow. The good news is according to recent unemployment rates reported here, the St. Croix Valley dashboard shows that St. Croix County is at 4.3 percent, which is below the Wisconsin and Minnesota averages, and well under the National Unemployment Rate at 7.7 percent. Unemployment has modestly decreased since last year. Total employment in St. Croix County is up 2.2 percent from last year. The job market is slowly but surely in a state of recovery locally. This is likely a factor in why we see the Hudson real estate market showing signs of improvement, consumer confidence, and the median sales price rising. It goes without saying that having job stability makes consumers not only able to afford a home, but have the confidence that they can keep that home without going in to foreclosure etc. Certainly we’ve seen investors and consumers taking advantage of the available housing across the country, which has led to a shrinking inventory, which will in turn help bring seller confidence and rising home prices. It’s taken years for consumers to begin feeling comfortable taking these risks, but depending on my next factor, consumer confidence could be tainted depending on how we handle the “fiscal cliff”.
The "Fiscal Cliff"
Some experts believe falling off the fiscal cliff will plunge our nation in to a recession, resulting in spiked unemployment. Taxes will undoubtedly go up for nearly everyone if we fall off the fiscal cliff, and it sounds like tax rates will go up on some even if we do reach a deal by the new year. Obviously rising unemployment rates and higher taxes will affect consumers and investors, as there will certainly be less disposable income, and many consumers will be unable to qualify for a mortgage. The real estate market has it’s own cliff coming up as well as I discussed in a previous blog.
The Real Estate "Cliff"
1. The Mortgage Interest Deduction Expires
It's possible that the tax break could expire and interest accrued on certain mortgage debt would no longer be deductible.
2. The Mortgage Debt Forgiveness Act Expires
Unpaid mortgage debt is up for grabs by the IRS, as in taxable income. This certainly will be tough on some homeowners who are in or plan to engage in a short sale.
3.Tax-deductible mortgage insurance
Mortgage insurance is tax deductible, at least until 2013. If Congress lets this expire, homeowners won't be able to deduct mortgage insurance.
4. Operation Twist Expires
This program was designed to lower long term interest rates. However, the Federal Reserve has continually and recently claimed it will keep interest rates very low until almost 2016 in hopes to encourage borrowers to purchase homes.
5. Foreclosure reviews
Request for a foreclosure review is also set to expire at years end.
Certainly all these factors will impact consumer confidence. The good news is that we are currently much more stable in our local market compared to the national average in employment and housing. So how much impact the coming decisions will have in 2013 on our local market isn't crystal clear. We are certainly hoping to see what we have been seeing, which is a steadily recovering housing market, building consumer confidence, and buyers and sellers taking advantage of positives in the housing market. December so far is again looking stronger than last year with 16 new listings as opposed to 9 the same time last year. We have 21 sold listings this December, which is close to on par with last year. So here's to a great finish for 2012 and a continued steady growth in our local market for 2013. Until next time, feel free to contact me if you have any questions about the local Hudson market.
I have been involved in real estate for nearly 20 years working as an assistant, hostess, closer, accounting and now licensed REALTOR for over 13 years. I serve the St. Croix Valley including: Lakeland, Afton, Stillwater, Woodbury, Hudson, Roberts, Hammond, Baldwin, Spring Valley, New Richmond, Somerset, River Falls, and Prescott. Contact me at realestatewimn.com.