This article by Mike Whitney points out that there is no question that prices are rising in some markets in the country (especially where Wall Street investors are snapping up foreclosures) and houses are selling, but it is due to (1) the contrived suppression of supply (banks are holding millions of distressed properties off the market) and (2) the massive stimulation of demand (the Fed purchases $40 billion of mortgage-backed securities every month to keep mortgage rates low), as I explained in my post "Housing recovery?".
Prices are not being allowed to find their natural level.
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A woman I have a lot of confidence in, Gail Tverberg of the Our Finite World blog, thinks that 2013 will bring the beginning of a permanent recession. But the Federal Reserve and the banks have been so successful in holding any major price deflation at bay (in housing and the stock market), that I don't see them faltering just yet. They seem to have struck upon a great (though cynical) temporary solution---suppressing supply by holding distressed properties off the market to drive up prices. It is without question getting some traction. But you can only hold these distressed properties off the market for so long.
So I think there will be a blip this year, even multiple bids with so little inventory and such hyperlow interest rates, and that this could drive local prices up briefly for the first time since 2005. (Expect to hear hosannahs from the media.) But I don't expect it to last. The fundamentals don't support it, and a small inventory of sold houses surely will not kickstart the national economy.
Reality, most likely, will kick in and Gail's permanent recession will soon be undeniable. So I think Gail's timing may be off a bit. Maybe in a couple of years, triggered by some unexpected event or shock, but in 2013?
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For the homebuyer, here's the skinny:
The market is shaping up for the year and you should expect to see little inventory.
With the very low interest rates and the low inventory, expect multiple bids (in Northampton and Amherst especially) and houses flying off the market. Prices will probably go up temporarily too. It's a difficult market for buyers. You're liable to buy too high (this is not going to last long and prices will resume their slow downtrend or flatline once reality kicks in), if you can buy at all. Not a good situation for buyers!