Friday, February 3, 2012

5 Real Estate Trends to Look For in 2012

Excerpts taken from Keeping Current Matters, Real Estate Web Site

Predicting trends during the most volatile housing market in American real estate history is no easy task. We strongly believe these are four real estate items we should keep an eye on in 2012:

1. Buyers Will Return

In 2011, a lack of consumer confidence in the overall economy dramatically impacted the housing market. Buyers were afraid to make a purchasing decision on any big ticket item. By the end of 2011, consumer confidence began to return and sales increased. Economic conditions will continue to improve throughout 2012 and consumer sentiment will solidify. Once that happens, home buyers will realize that now is the time to buy.

2. Foreclosures Will Increase

The ‘shadow inventory’ of foreclosures which has been growing since the robo-signing challenges of late 2010 will finally be introduced to the market. Distressed properties sell at discounted prices. They will impact the housing values of the non-distressed homes in the area.

3. Prices Will Soften

As more and more foreclosures come to market, there will be greater downward pressure on the values of houses in the region. Foreclosures impact values of non-distressed properties in two ways:

■ They will eat up some of the buyer demand in the market.
■ They will impact the appraisal on ALL transactions in the area.

An increase in foreclosures will have a negative impact on values. This will cause more homes to be underwater.

4. Short Sales Will Increase

As mentioned above, we strongly believe that home prices will soften through at least the first half of 2012. Falling prices will force more homeowners into a position of negative equity. Negative equity is one of the triggers that cause people to strategically default on their mortgage obligations. If this happens, there could be an increase in the number of foreclosures. However, we predict that banks will take preventative measures which will help many of these homes avoid foreclosure by easing the requirements in the short sale process for both homeowners and real estate professionals

What are some of the bottom lines from all of this? Here is yours truly's best shot at his clearest crystal ball.

+ We will see a bottom in prices in PA in 2012. In fact, there are some indications this has already happened.

+ Once it becomes common knowledge that we hit the bottom and are on the way back up, there will probably be a mini panic of people jumping to get on the band wagon before it gets too far out of the station.

+ Now is the best time to buy a house that we have seen in the last 50 years, and that we probably will see for the next 50.

How many of these will come true? I will keep track and let you know.


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