All of the media are now looking back at 2011 and making predictions for 2012. I’m not a psychic or a crystal ball type of guy, but here’s my look back and my educated predictions for real estate heading into the new year. Home sale prices fell the last quarter of 2011 with bank-owned properties driving down prices nationwide, on the other hand the number of homes sold increased because of the dip in home prices. As the year draws to a close, there’s a lot of pent-up demand in the residential market which could foster an active and busy 2012.
Home sales are likely to rise about 3 percent next year with prices up an average 2 percent nationwide. Once home prices turn upward for a sustained period that will lead to consumer confidence and help the broader economical improvement. There’s still significant factors that might keep the market from taking off in 2012, chief among them is the unease with the economy and jobs. Will creating jobs fix housing or will robust housing create jobs. Nothing would cure the ills of the housing market like job creation. Unemployment dipped to 8.6 percent in November. As we breeze into the new year, if the unemployment rate stabilizes, then we know these jobs created during the holidays are not just temporary.
The foreclosure crisis will continue to plague the market with nearly 1 million foreclosure-related notices of defaults that should be filed this year , but likely being pushed back until 2012. This will continue offering home buyers spectacular opportunities heading into next year. The size of the inventory and whether mortgage standards are tightened or loosened will have a huge effect on prices and market recovery. Entry level homes will continue selling because banks are moving more quickly on short sales.
Maintaining reasonable and efficient mortgage underwriting standards would enhance the housing market and possibly avoid any future boom and bust cycles, but mortgage guidelines will probably remain overly stringent. Fortunately for the hard to please home buyer that delayed purchasing a home, this should not affect the mortgage interest rate you’ll pay. Interest rates are unpredictable, for the time being there’s no reason to expect a significant increase next year or at least until the unemployment rate is substantially slower. First-time buyers made up nearly 40 percent of home purchases in 2011, that was down from 50 percent in 2010. First-time buyers will still be a large segment of the buying populous next year.
For the doom and gloom crowd, remember this. Approximately 10,000 homes sold every single day in the United States in 2011. I predict those numbers to increase in 2012. Forget stocks and gold. After five years of plunging home prices, the most attractive asset class in America is housing. Obviously, I can’t guarantee these predictions will hold up, but what does become clear is even the worse markets will begin to see improvements in 2012. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my other informative blogs and easy access to view all local area homes for sale in Davis,California.