by Dr Pandula Siribaddana

Created on: January 01, 2013   Last Updated: January 18, 2013

When the housing bubble burst, it took the housing prices with it and until now, economists were skeptical about its recovery. However, according to market analysts, housing markets have shown gradual gains over the last year and the year 2013 could well be a significant year where housing market returns to its former glory. In fact, they have recognized several characteristics that would determine the growth of a housing market. If a city or a metropolitan area possesses these characteristics, it has the potential to become one of the best housing markets in the country for the year 2013.

Characteristics of a rising housing market

According to the real estate information site Trulia, the three fundamental characteristics that could determine the status of a housing market are strong job growth, low but manageable vacancy rate and a low foreclosure inventory. Although the job growth is itself understandable, the terms ‘vacancy rate’ and ‘foreclosure inventory’ needs little introduction. Thus, the ‘vacancy rate’ refers to the percentage of housing units that are unoccupied at a given time. The term ‘foreclosure inventory’ refers to the number of housing units that had to undergo foreclosure procedures as the lenders fail to recover the mortgages from the house owners. Therefore, a housing market is expected to grow when the vacancy rate remains at a relatively low level as a high vacancy rate could hold down the rental prices, the construction as well as the recovery. Meanwhile a lower foreclosure inventory means that a particular market did not suffer much in terms of home prices during the recession. While a low foreclosure inventory reflects the ability of the market to resist, it also indicates that the rise in housing prices can be correctly associated with the rise of the market itself. In the instance of ‘job growth’, having a higher job growth means that the people are able to afford or buy houses than when the employment rate is at a all time low.

Housing markets to watch for during 2013

Based on the criteria adapted by Trulia, analysts predict Houston, Texas to be the number one housing market for 2013 with a job growth of 3.6%, vacancy rate of 3.0% and a construction permits issued at a rate of 15.4 per 1000 homes. However, the foreclosure inventory for Houston was 7.7 homes per 1000 units, which was relatively higher than the other housing markets which are predicted to do well in 2013.

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