What to expect in 2012

Is 2012 the year the housing market turns around? Of course, no one can say for sure, but plenty of economists say signals are pointing in the right direction.

What to expect in 2012:

Home prices bottom out. Nationally, home prices have plummeted almost 24 percent off of their peak, and most economists expect prices to continue to decline as much as 4 or 5 percent before leveling out in late 2012.

More foreclosures. Foreclosure filings have edged downward over the past few months, suggesting improvement in clearing the gigantic inventory of distressed properties in the United States.

Low mortgage rates. Rock-bottom low mortgage rates are likely here to stay, at least through the first half of 2012, in large part due to the Fed’s commitment to keep interest rates low to spur borrowing. All bets are off, though, if politicians come to a decision on the qualified residential mortgage measure included in the Dodd-Frank financial reform act.

Rising rents. The foreclosure crisis has converted millions of previous homeowners to renters and many would-be homebuyers have continued to stay on the sidelines and rent, waiting for prices to “hit bottom” before jumping into the housing market fray. With more demand comes rising rents, a trend already being seen in many metro areas across the nation. Ultimately that can be a good thing for the housing market, since it generally tips more people into buying homes. Also, with rental demand heightened, real estate investors’ ears have perked up. With prices in many metro areas at historic lows, investors are taking advantage and scooping up properties to convert into rentals.

Home sales pick up. The end sum of all these factors is an expected uptick in existing and new home sales next year. New home sales should also see an even bigger bump between 10 and 15 percent because the inventory of new constructions is so low.

As always we are going to have to wait and see what the new year brings.

If you have any questions call or text Scott Groves at (818) 679-5188