Perhaps the highest compliment that can be paid to the Washington area in 2012 is that it was "balanced." The market was no longer cold, nor was it irrationally hot.
"It was a decent year for sellers and also for buyers," said David Rathgeber of Your Friend in Real Estate. "Sellers could sell anything in a reasonable amount of time if it was priced correctly, and buyers could find what they wanted and buy it without having to fight other buyers too much."
Of course, with 2013 beginning in a few days, most people are more concerned with the market to come than the one we leave behind. What can buyers and sellers expect next year?
"We are entering next year with energy and optimism -- which is different than recent years," says Susann Haskins, branch manager of Long & Foster's Bethesda Gateway office.
"In 2012 we saw much more activity in the market. We saw price increases return. Stability and consumer confidence are back. In fact, what we are seeing now is a tremendous lack of inventory," she said.
While Mrs. Haskins is speaking only of Montgomery County and the District when she says there aren't enough homes for sale, reduced inventory is having an impact on the entire Washington-area market.
On Nov. 30, 2008, more than 39,000 unsold properties were listed for sale in the database of Metropolitan Regional Information Systems, the company that handles listings for Realtors in this region.
Four years later, on Nov. 30, 2012, just 15,700 homes were available for sale. Yet buyers are more active now than they have been in years. This means homes have been selling more quickly, and often for more money.
"We are seeing multiple offers on properties," Mrs. Haskins said. "The offers are often well above asking price, and the homes are sold in just a day or two. Our buyers and agents tell me there is nothing to buy out there."
Mr. Rathgeber said he thinks competition among buyers could push Northern Virginia home prices up by 4 percent to 8 percent in 2013.
His question to would-be home buyers: "With prices and interest rates where they are, if you have been thinking about buying a home and haven't done it yet, what are you waiting for?"
"Next year is going to start out fast," Mr. Rathgeber said. "I can already feel it picking up, which is unusual for the end of December."
Whether next year's market really gets under way in January or February depends a lot on the weather. Months with significant snowfall usually see a corresponding drop in real estate activity.
Regardless, if you plan to sell a home, you need to "get your home on the market by February at the latest," Mr. Rathgeber said. "Because March is the best month for resale homes."
Every year, Washington-area buyers are most active in March, April and May. The number of homes for sale also increases during those months, but not as much as the buying activity. As a result, buyers are forced to compete more in the spring than at any other point of the year. This causes home prices to go up the most in those months because a buyer often is willing to pay more when he knows others are trying to buy the same home.
"This year I've had to fight on behalf of my buyers more than I have since 2005," Mr. Rathgeber said. "And when we fought other buyers, we only won because we offered more than the asking price."
That is precisely why home prices rise the most in the spring, making it the best time to sell a home.
Those who might want to list their home as a short sale, however, need to wait a bit to see what Congress is going to do. The Mortgage Forgiveness Debt Relief Act of 2007 is scheduled to expire on the last day of 2012. Unless Congress did something after today's paper went to print, sellers of short sales in 2013 will have to pay taxes on their canceled debt.
"So sellers of short sales are nervous, and short sales could virtually disappear in 2013," Mrs. Haskins said. "Many of these people would go to foreclosure instead, which is a long and costly process in Maryland and the District since they changed their foreclosure laws recently."
The other uncertainty about 2013 is mortgage interest rates. They have been so low for so long that many people assume 4 percent is normal. Higher rates could deter buyers.
"I don't think we're going to see a ton of movement in rates early in 2013," Mrs. Haskins said. "They are at an amazing level right now. The problem is, people think this is the norm. I remember when I had a mortgage with an interest rate of 16 percent!"
Mortgage interest rates have remained low, in part, because the federal government has been buying its own bonds in a program known as "quantitative easing." This quantitative easing cannot go on forever. When it ends, mortgage interest rates likely will rise, area real estate experts say.
"Eventually rates will have to go up, and when [they do] it might put a damper on real estate for a while," Mr. Rathgeber said. "On the other hand, this quantitative easing could bring on inflation at some point, which will cause the value of homes to rise."
And that often is a boon to real estate, because higher home values encourage homeowners to think about selling their property and buying something more expensive.
Still, some real estate professionals have been reluctant to acknowledge that home prices are recovering.
"We've seen more appraisal problems than in any year I can remember," Mr. Rathgeber said. "A third of my transactions this year have had some kind of issue with an appraisal."
Lenders require appraisals of a home's value to make sure they aren't lending too much money to the buyer. Inflated appraisals contributed to the recent meltdown of the real estate market. Nowadays, appraisers are much more cautious.
"Not one appraiser has been willing to change his appraisal this year, not by a single penny," Mr. Rathgeber said.
"It might be a little better next year, because the appraisers have to, at some point, recognize that prices are actually going up. They have been in denial, like they felt they had a responsibility to appraise low."