If California's housing market is any indication of how the national housing market's recovery will fare, and it often is, things are looking up.
The California Association of Realtors (CAR) recently reported sales in the Golden State's housing market will gain 1.3 percent in 2013 while the median home price will rise more, by 5.7 percent.
"The market has improved moderately over the past year, and we expect that to continue into 2013," said CAR President LeFrancis Arnold.
"Sales would be even higher if inventory were less constrained in REO-dominated markets, particularly in the Central Valley and Inland Empire, where there is an extreme shortage of available homes. Sales will be stronger in higher-priced areas, where there are more equity properties and a somewhat greater availability of homes for sale," said Arnold.
The 1.3 percent increase for 2013 is off the expected increase of 5.1 percent for 2012. The 5.7 percent increase in home prices to a median $335,000 in 2013, follows a projected 10.9 percent increase to $317,000 this year.
The median price remains well off the high of nearly $595,000 back in May of 2007, but that makes for great affordability.
"Housing affordability has never been stronger - with record-low interest rates and favorable home prices, combining to create a once-in-a-generation opportunity to buy a home in California," said Arnold.
Economic growth is supporting the state's housing recovery.
CAR forecasts a job growth of 1.6 percent in California as the state's unemployment rate drops to 9.9 percent in 2013, down from 11.7 percent in 2011 and 10.7 percent in 2012.
California added 300,000 jobs from August 2011 to August 2013 with Stockton, San Francisco and San Jose showing the greatest gains. The professional and business employment sector, which includes Silicon Valley technology, is the big jobs generator, CAR reported.
The often conservative CAR forecast predicts mortgage interest rates will edge up to 4 percent in 2013, despite the recent Federal Reserve's announcement to keep interest rates low with $40 billion in additional monthly mortgage securities purchases.
"The housing market momentum, which began earlier this year will continue into 2013," said CAR Vice President and Chief Economist Leslie Appleton-Young.
"Pent-up demand from first-time buyers will compete with investors and all-cash offers on lower-priced properties, while multiple offers and aggressive bidding will continue to be the norm in mid- to upper-price range homes," she predicted.
Appleton-Young also said, "The actions of underwater homeowners will play an important role in housing inventory next year, with rising home prices inducing some to stay put and others to list and move forward."
The share of households suffering negative equity dropped from 35 percent in 2009 to 29 percent in 2012.
Appleton-Young cautioned, nothing's guaranteed. California housing forecasts are based on recent trends and historic cycles that can be interrupted by a host of factors.
"The wildcards for 2013 include federal, monetary and housing policies, state and local government finances, housing supply, and the actions of underwater homeowners - not to mention the strength of the overall economic recovery," Appleton-Young said.