Coming out of what is pretty much our country’s 4th full year since the mortgage meltdown, it seems like a lot of people still have a nasty taste in their mouth from what that disaster has done to them. Many people have lost thousands of dollars in equity in their homes, and others have been forced to sell because they were unable to afford what they were living in. In some areas, as many as half of all sales are either foreclosures or short sales, and the lending standards were getting tighter than spandex on a sumo wrestler!
Fast forward. Things are starting to change for the better, and many experts believe that this will be the year we climb up out of the trough. Our area has already benefited from the Base Realignment and Closure (BRAC), which has brought thousands of new employees to the area working in Government and Defense Contractor positions. This has held prices steadier than what they would have been otherwise, although many planners forgot to measure the offsetting impact that the departure of a large portion of the active military personnel that have been here for so many years would have.
Still, broader economic forces are at play here, and until they are back in balance, we will continue to see what can only be viewed as a modest recovery at best. Read through 5 things that we should expect from the real estate (and the broader economy as a whole) in 2012.
1.) Interest Rates will rise again, but no time soon- Yes. I hate to be the bearer of bad news; this party will end, but not in the near future. My most recent closing for a client on a 30-year loan was at 3.875%. I am sure that some of you have seen better rates, but this is about as good as it gets. As a matter of fact, a record has been set recently with the recording of the lowest rates in about 60 years with an average of 3.91% for the 30 year note.
http://www.businessweek.com/ap/financialnews/D9RPKO100.htm
2.) Home Prices will rise- No, I am not a psychic, but the writing is on the wall. Home prices reached a 7-year low when they ran in line with 2004 levels, and we all know what happened just after 2004…The party started, prices got inflated, and loans got rubber-stamped. This proves that we are now returning to reality…
http://www.housingwire.com/2011/09/22/fhfa-home-prices-hit-2004-levels
3.) Unemployment Will Drop- I am sure that those of you that are unemployed are glad to hear that. I know this because I watch trends; not because I plan to be the one doing any hiring. Skeptical? Look at the chart at the link below this section and set the graph to show the historical rate over the past 50 years or so (I went back to 1961). You will see that we had this kind of hiccup in 1981 that lasted through until about 1987. For those of you old enough (I was actually 4 in 1981, so I wasn’t really paying attention to the unemployment rate!), you will remember experiencing the same type of pain back then. Sure, some things are different, but we should expect the trend to be the same. Based on this, I can reasonably expect the rate- currently at 8.6%- to drop to somewhere in the high 7’s at this time next year. Oh yes, I expect some of you to call me out in a year if I am wrong about this!
http://data.bls.gov/pdq/SurveyOutputServlet
4.) Fear will subside- I don’t mean the fear that you experience when you are watching Saw or Hostel. I am talking about the fear that prevents you from doing what you want to do because of uncertainty about the future. I am not saying that there hasn’t been a good reason to be fearful about some of the nonsense that has been going on in our economy; I am just saying that with properties moving steadily (either because owner-occupants are purchasing or because investors are snatching them all up), there won’t be as many chances to be fearful. Either you will jump in and take advantage of the great buying and selling conditions, or you will sit back and wait. There won’t be an in-between because the market won’t slow down for it….
5.) Congress will be Eliminated- Ok, not really… but think about it. No one is going to launch any crazy legislation during the Presidential election year, which is actually a good thing! The proverbial handcuffs will be off of our country’s resilient economy, and in spite of the nuisances down in DC, we will be able to conduct free trade! Sure, we’d like them to retract some of the ridiculous knee-jerk laws that have already been planted on the banking system, but I will settle for them doing nothing!
All jokes aside, I can expect us to have a tremendous year in 2012. We will witness our economy’s rebirth after a tremendous recession, and for housing to return to normal. With that, millions of skilled jobs should become available to people that want them, and our country’s economic engine will be roaring once again.
Courtesy of www.scottmillerrealestate.com
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