On December 10th, mortgage giant, Freddie Mac released it’s U.S. Economic and Housing Market Outlook for December. The report looks ahead to 2013 and gives us a prediction as to what can be expected in the housing market.

Coming off many consecutive months of positive news, the outlook is that the housing market will continue to advance into the new year. The two major points of the report were:

1. Long term mortgage rates should remain near their record low levels through the first half of 2013 and gradually rise during the second half of the year. Even with the second half rise, rates should remain below 4%.

2. Home values should continue to rise with most U.S. price indexes seeing a 2 to 3% increase in 2013.

Freddie Mac’s chief economist, Frank Nothaft stated, “The last few months have brought a spate of favorable news on the U.S. housing market with construction up, more home sales, and home-value growth turning positive. This has been a big change from a year ago, when some analysts worried that the looming ‘shadow inventory’ would keep the housing sector mired in an economic depression. Instead, the housing market is healing, is contributing positively to GDP and is returning to its traditional role of supporting the economic recovery.”

Troy Stavros, Broker and Partner with the 865 Real Estate team added, “What we are seeing in the local Knoxville real estate market is in line with Mr. Northaft’s projections. With the low inventory levels we are witnessing, we could see Knoxville home values rise even faster than predicted. The affordability of housing right now is at historical levels. Buyers are seeing this and entering the market. Lack of Knoxville homes for sale is leading to competition. It doesn’t happen very often when it is a great time to be a buyer and it’s a market where there might be competition for your home if you are a seller. Unless you are currently underwater in your current home, there should be no more excuses, it’s time to get off the fence and into the market.”.

Every week it seems, there is more news that home prices are increasing on a national level. Knoxville homes for sale are definitely following suit. The 865 Real Estate team, the leading Knoxville real estate team at Gables & Gates, REALTORS recently discussed with their clients the top 2 reasons why we are seeing home prices increase. Troy Stavros, Broker and Partner with the 865 Real Estate team stated, “Many of our clients can’t understand how prices can be increasing, when what they keep hearing from the national media is how the market is still bad. The truth is, things aren’t that bad here in Knoxville and in many other parts of the country. Specific factors are leading to the nationwide price increases, so we thought we would educate our clients on them.”

Reason #1: First and foremost, Stavros stated, is what we learned in Economics 101. Supply and Demand. Nationwide the inventory of homes for sale are at historic lows. New homes are at their lowest level seen in 50 years. Existing homes for sale are at a 10 year low. Distressed inventory (i.e. foreclosures) has fallen as well. “Buyers are still out there. A smaller pool of homes to choose from and buyer demand leads to competition for properties. Where competition between sellers might lead to lower prices, competition between buyers leads to higher prices.”

Reason #2: Why is there a demand to buy a home now? Affordability. Stavros said, “Many buyers are not only seeing the chance to buy homes that are at bargain prices, but they are realizing the impact it can make on their budgets. Why is that? Two words: Rates and Rent.” With mortgage interest rates at all time historic lows, a home buyer has more purchasing power than ever before. It wasn’t that long ago that interest rates were 7%, and now they hover around 3.5%. On a $1500 a month, 30 year mortgage payment, today’s rate lets you afford almost $100,000 more house. Stavros says, “That is buying power! Couple that with the rising cost of rent, and renters are coming out of the woodwork to buy homes, and those that aren’t should be.”

The advice of the 865 Real Estate team to local clients scouring Knoxville homes for sale is don’t wait. “If you find something you like, and your agent, after researching tells you the pricing is in line, jump on it. Waiting too long or making a low offer are the too biggest reasons for losing a home you love. With these inventory levels, this is a different market. Old strategies for buying don’t necessarily apply.”

Troy Stavros, Broker and Partner with the 865 Real Estate team stated, “Whether it is when we are working with buyers looking at Knoxville homes for sale, speaking with our current sellers, speaking with past clients or talking with complete strangers, the question always comes up… What is happening with Knoxville real estate and where do you see it going?

Equipped with information from the National Association of REALTORS that was garnered at the recent 2012 Realtors Conference and Expo, the 865 Real Estate team shared the forecast. Stavros said, “With the important caveat that credit does not tighten further and a fiscal cliff is avoided, Knoxville home prices should continue to rise.” The 865 Real Estate team quoted NAR economist, Lawrence Yun who predicted a 6% increase in the median home price in 2012, followed by an increase of 5.1% in 2013, and comparable increases in 2014. Along with prices, sales are projected to increase each subsequent year as well. With 2012 seeing a 9% increase to 4.64 million, and 2013 increasing to 5.05 million, then 2014 to 5.3 million. The amount of distressed sales is predicted to decrease from about 25% in 2012 to only 8% in 2014. Economists saw mortgage interest rates increasing to and average of 4% in 2013 and moving higher to 4.6% in 2014 caused by inflationary pressure.

Stavros also noted that these predictions are for the national real estate market and reminded the 865 Real Estate team clients that Knoxville real estate has fared much better than most other markets. “Looking at the local market, with distinct indicators such as low inventory, buyer demand, and competitive bidding tells me there is only one place for our market to go, and that is up. The only reason I can see this not happening is if buyers cannot access money to buy Knoxville homes for sale, i.e. lending standards get tighter, or if there is a major governmental breakdown such as the fiscal cliff.”

The 865 Real Estate team, the leading Knoxville real estate team at Gables & Gates, REALTORS has announced their personal fight against a popular internet scam they are seeing not only in Knoxville, but nationwide. The posting of fraudulent rentals on internet sites such as Craigslist and large real estate sites like Trulia and Zillow, that are actually Knoxville homes for sale. These fraudulent ads are being posted on a daily basis, hoping to lure in unsuspecting renters.

The 865 Real Estate team says they are fielding calls from potential renters on a daily basis. You may wonder why the 865 Real Estate team, a team that only lists and sells Knoxville real estate, are getting rental calls. The following is how the scam typically works: The scam artist begins by trolling the internet, looking at Knoxville homes for sale on sites like Trulia, Zillow, or Realtor.com. They find a Knoxville home for sale that is located in a desirable area and looks to be in nice condition. They then proceed to copy the address, photos, and description of the Knoxville home for sale and list it on sites like Craigslist, Trulia, and Zillow at a rental price well below typical market rent, and many times offering additional bonuses such as free utilities. When the potential renter gets in contact with the supposed owner of the home, a story typically ensues where the owner tells the renter that they are currently out of the country (often even saying they are on a mission trip), and are looking for someone trustworthy to rent their home. The scam artist uses the actual name of the owners of the home, which they have researched and found in public records. They follow by asking the potential renters to fill out an application, which they no doubt approve quickly, and then ask for them to mail a deposit so they can subsequently send them the keys to the home. All without the renter stepping into the home.

The lure for the renter is obviously the incredible deal, because the home is renting for so far below market rent. Gladly many of these would be renters do a little extra research by either doing an internet search on the address or driving by the property. This is how they end up calling the 865 Real Estate at Gables & Gates, REALTORS.

“Once they search the address on the internet, the property comes up for sale and they see our contact information, or they drive by the home and see our sign and call”, says Troy Stavros, BROKER/PARTNER at the 865 Real Estate team. “We are thankful to be able to speak to them before they proceed any further. We get multiple calls daily as a result of this scam. We typically have 40-50 listings on the market on a regular basis so the odds are good that a few of those will be picked up by the scam artists. I think they like our professional photography and the great homes we list. I just feel bad for the folks that don’t call us. Hopefully, before they go through with sending any money, they will realize that if it seems to good to be true, it usually is.”

The problem stems from the fact that you can list a rental home on sites like Craigslist, Trulia, and Zillow through sites like Postlets without any real verification of validity.  Hopefully those sites can find a way to remedy the issue. Until then, along with fielding phone calls, and trying to get the word out to the public, the 865 Real Estate team is being proactive by searching the websites daily to find the fraudulent ads on their listings, and reporting them to the sites for removal. Stavros concluded, “Be careful out there! Do your due diligence. Our recommendation would be to do an internet search on the address and contact a professional real estate company for assistance.”