The housing market will improve moderately in 2013, but nobody will mistake this for a boom. The gains in activity and prices will be a welcome relief, but will leave many homeowners still underwater.

Our recent underbuilding has been the greatest aid to housing recovery. It did not act as fast as we might have expected, because the recession slowed population growth, from both a smaller birth rate as well as less net migration from abroad. In addition, the population we did have used fewer housing units per person, as adult children moved back in with their parents. Slow improvement in the job market means slow movement of kids away from their family homes, but even though slow, the movement is in the right direction.

It’s too early for housing starts to get back to normal—and we certainly will not see above-normal construction anytime soon. But 2013 will probably see over one million total housing starts. This will be a substantial percentage gain over 2012.

Home prices will rise in 2013, but only modestly. The most recent data suggest that national average housing prices are rising by roughly five percent annual rate. That’s too optimistic a projection for the next few years, however, because there are many owners of multiple underwater properties who will sell as soon as they don’t have to lay out cash. That increased number of houses on the market will limit price hikes.

Business cycles aside, there is not much reason for housing price to appreciate by more than three percent plus inflation, or about five percent in this current environment. Periodic booms and busts will push price gains above or below trend, and a change in tax laws that favors or disfavors real estate will cause one-time price changes.

Apartment investors (and landlords of single family homes and condos) will find that their little boom does not strengthen much further. Rents have risen so much that owning is becoming cheaper than renting in many cities. Add in the expectation of price appreciation and we’ll soon see renters itching to buy their own homes. Times will not be hard for landlords, but they should not project further gains beyond what they secured in 2012.

Consumer expectations for U.S. home prices perked up in December, matching a modest fourth-quarter improvement in the U.S. economy, according to a monthly survey from mortgage market firm Fannie Mae.

For its December reading, Fannie Mae said survey respondents now expect home prices to rise by 0.8% over the next year, up from the 0.2% gain predicted in November.

Views on the direction of the U.S. economy also improved: 22% of respondents indicated a belief that the U.S. economy is on the right track, marking a 6-percentage-point jump from November’s survey.

On personal finances, 40% of respondents said they anticipate their personal financial situation to strengthen over the next year. Fannie Mae noted the response marks the first time since February that a larger share of respondents indicated they expect improved personal finances rather than finances that will remain the same over the next year.

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The number of San Diegans filing for foreclosure and defaulting on their mortgages continued to fall in June marking the 19th consecutive month of decreases, reported real estate tracker DataQuick.

The county recorded 1,353 notices of default in June, which is down 21.8% from a year ago. A notice of default is the first step in the foreclosure process. June's drop marks the 19th consecutive year-over-year decrease for San Diego.

June numbers for San Diego align with the state's. Foreclosures in California fell to a four-year low during the second quarter, from March to June, the monthly DataQuick report said.

"A lot of theories are being floated as to why the numbers are down," said DataQuick President John Walsh, in a statement. "Bank policy changes. Legal challenges. Politics. Holding back temporarily so as not to flood the market."

Walsh added: "The fact of the matter is that no one really knows, outside of lending and servicing industry insiders. One thing is certain: Homeowner distress spreads fastest when home price declines are steepest. And it now appears likely that, barring some new economic shock, the worst of the price declines are behind us,"

Comparing 2011's second quarter to last year's second quarter, both notices of default and foreclosures are down. That's a trend seen throughout Southern California.Southern California recorded 30,384 notices of defaults this second quarter, down 19.5 percent from 2010's second quarter. There were 21,247 foreclosures in the region this quarter, down 13.9 percent from last year's second quarter.

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Largest model in Pell Place! This bright & spacious corner unit enjoys a large private balcony with north views and is conveniently located on the first level. Large walk-in closets & laundry room. Beautifully upgraded throughout. 2 side-by-side parking spaces. Extra storage room on balcony. Pell Place is located adjacent to top Carmel Valley Schools, Carmel Valley Community Park, Del Mar beaches, and convenient shopping, etc.

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