First Person: Housing Predictions for 2013 Spooked Me

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Housing predictions for 2013 are moving me to refinance and stay put in my home for the long haul. According to a recent article by TruliaTrends, the housing market is inching back to the normal side. People aren't concerned about the same issues in 2013 as they were in 2012 because the housing market is slowly but steadily recovering. I know my Florida home touched down at an all-time low value of $109,000 at the start of 2012, but it's ending the year at $123,000. The value now mirrors the value from September 2010.

When it comes to housing predictions, I know that no one has a crystal ball. However, I have strong suspicions that the interest rates as well as home values will go up gradually in 2013.

Waiting for prices to bottom out

I think anyone waiting for housing values to bottom out has already missed that boat. I know a close friend was able to land a nearly-new home for $94,000 at the end of 2011. Now that same home in my Florida subdivision is worth $115,000, but it's not yet back to its high value of $195,000. In many parts of the country, the prices of homes are starting to rise. The new question being asked in 2013 is whether the inventory will bottom. In my neighborhood, the inventory is grabbed up in a matter of days. I recently talked to a Realtor showing the house across the street from me. He advised his client to put in a bid above the asking price to beat the competition.

Making homes affordable

In 2012, the huge declines in real estate prices made combined with low interest rates made homes extremely affordable. I know one senior citizen friend who was able to purchase a home with cash because of the low price. According to Trulia, owning a home was 45 percent less expensive than renting in the summer of 2012. In 2013, the forecast is declining housing affordability because home prices are rising faster than rents. Even though homes may not be as affordable in 2013 as they were in 2012, I still think they are a bargain compared to the 1980s when people had to deal with mortgage rates of between 12 and 20 percent.

Cutting mortgage deduction

In 2012, I was able to lock-in at 2.75 percent as part of a mortgage refinance deal for my Florida home that I bought in 2005. Experts say that expanding refinancing helped stimulate the economy. In 2013, the new buzz is about cutting the mortgage interest deduction. I know that eliminating a mortgage deduction won't affect my family since we don't itemize our deductions. We take a standard deduction that does not allow for a mortgage deduction.

Based on the predictions, I don't see any benefit in selling my home in 2013. Considering I purchased my house during the housing bubble for $183,000, I'm skeptical home values will return to those levels. Instead, I'm refinancing and staying settled. My prediction is that I'll have to deal with rising property taxes as the value of my home continues to recover. Some aspects of the housing recovery are not as pleasant as others.

More from this contributor:

My Life After Debt

Being Happy in a Smaller Home

Remodeling our Empty Nest

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