NAR chief economist Lawrence Yun says he expects the market share of distressed sales to fall from about 25 percent in 2012 to 8 percent in 2014, according to a release on the forum.
Mark Vitner, managing director and senior economist at Wells Fargo, was one of the speakers at the NAR forum. Vitner compared distressed homes to an after-Christmas sale stating, “most of the best stuff has been picked over, but make no mistake they’ll be with us for a while.”
The housing recovery was expected to continue so long as credit does not further tighten and a fiscal cliff is avoided.
The rise in home prices should also stay. Yun predicted a 6 percent rise in the median existing-home price in 2012, with another 5.1 percent increase next year and comparable gains in 2014.
Existing-home sales were projected to move higher year-after-year: a 9 percent increase this year to 4.64 million, 5.05 million in 2013, and 5.3 million in 2014.
Mortgage interest rates were expected to eventually increase to an average of 4 percent next year, and inflationary pressure should cause rates to go up to 4.6 percent in 2014, the NAR said in the release.
Yun projected a higher Gross Domestic Product (GDP) in the coming years, with GDP expected to be 2.1 percent this year and rise to 2.5 percent in 2013. The unemployment rate should also fall to about 7.6 percent in 2013.
Yun stressed that the “projections assume Congress will largely avoid the ‘fiscal cliff’ scenario.”
“While we’re hopeful that something can be accomplished, the alternative would be a likely recession, so automatic spending cuts and tax increases need to be addressed quickly,” Yun added.
By Esther Cho