Predicting trends during the most volitile housing market in american real estate history is no easy task. According to the crew at Keeping Current Matters, these are the five real estate items we should keep an eye on in 2012.
1. Buyers Will return
In 2011, a lack of consumer confidence in the economy dramatically impacted the housing market. Buyers were afraid of making any big ticket item purchases. By the end of 2011, buyer confidence began to return and sales increased. Overall economic conditions will continue to slowly improve throughout 2012 and consumer confidence will solidify. Once that happens, home buyers will begin to relaize 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. Banks finally have the clearance from the courts to clear their inventory. Over 10% of all the homes on Long Island are in pre-foreclosure (90 days or more behind on mortgage payments). As these properties are foreclosed on by banks, and the banks begin to release their inventory to the public, we will see more discounted prices. Distressed homes will impact the 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 pressure on the values of houses in the region. Foreclosures impact the value of non-distressed properties in two ways:
- They will eat up some of the buyer demand in the market. Less demand equals higher supply, equals lower cost.
- They impact the appraisals on ALL transactions in the area. According to appraisers that I have recently spoken with, the appraisal must include foreclosed/ bank owned/ and short sale properties in their reports to the banks if the market area consists of more than 10% of sales in distressed properties. AGAIn- ALL OF LONG ISLAND is at at least 10% pre-foreclosure status. So ALL areas will be affected in appraisals.
An increae 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 home prices will force more homeowners into a position of negative equity. Negative equity is a main trigger for people to "strategically default" on their mortgage obligations. Even the areas that have not been affected in recent past have a higher chance of being negatively affected now. Homeowners who do have the money to make their mortgage payments, but view their home as a depreciating asset (or liability) will choose to strategically default on their mortgage payments, or short sale the property. If this happens, there will be an increase on the number of foreclosures. However, banks will most likely be taking preventative measures to help these homeowners avoid foreclosure by easing the requirements in the short sale process for bith homeowners and real estate professionals.
5. Great Agents will be VERY Successful
Real Estate Professionals who have invested the time, money, and energy to truly understand what is happening and why it is happening will seperate themselves from their competition and do very well this year.
Those who take the next step of learning how to simply and effectively communicate the market to their clients will be seen as industry leaders. these experts will dominate their market.
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