My Annual 10 Real Estate Predictions for the Upcoming Year

A simple answer to any questions about the real estate market in 2012 is: If you want to know what the housing market will be like next year, ask the government. At this point, low mortgage interest rates only exist thanks to its efforts and job recovery is essential to real estate recovery.

But if you were to ask me, I predict:

1.  Foreclosures and short sales will play a key role in U.S. housing.  The U.S real estate market is poised to be hit by another surge of bank repossessions.

2.  Buyer confidence levels will remain low due to election-year mud-slinging. 

3. Expect a fight over the home mortgage interest deduction.

4.  Rates will remain low through the year. 

5.  Builders will begin building…slowly and cautiously…and their primary pool of buyers will be those that have sat on the sidelines and now believe that if we are not at the bottom, we are close enough to make a move without significant negative consequence…especially considering today's prices for new construction.

6. Many lower end move-up buyers will remain cautious, wary of further market reductions and/or fear of job loss.  Consumer confidence will be tied to unemployment numbers.

7.  We will see a rise in home sales in terms of units sold.  The baby boomers began turning 65 in 2011, which will cause a rising number of retirement-driven listings.

8.  There will be little or no appreciation in home values.

9.  Homebuyer's real estate tools will become even more mobile… everything from smart phones, iPads, netbooks, portable scanners, e-signatures and more.

10.  On the commercial front... retail, office and industrial vacancies will decline as more tenants seek, and receive, landlord concessions.

All in all, I predict a slow and steady recovery in real estate for 2012.  Consumer confidence is the key to a turnaround in the market. The government has to stimulate the jobs recovery and when it does, the real estate market will follow.

Have a great year and remember this...2012 may be the BEST year ever to buy a home, with incredibly low interest rates and property prices.  Don't be one of those that in 2013 or 2014 says: "I remember when I could have bought that home for $X" or "I missed the opportunity of a lifetime in 2012."

Best regards,

Jay 

My Annual 10 Real Estate Predictions for the New Year

There are a lot of sighs of relief now that 2010 is past, particularly coming from the real estate industry.

But will 2011 be any better?

Having just dusted off my crystal ball, I can now offer my annual 10 predictions for real estate in 2011:

1. Inventories will skyrocket in the spring resulting from sellers who took their homes off the market during the winter hoping to capture buyers in the "spring market" and #2 below.

2. Short sales will increase and foreclosure inventory will continue to rise. The combination with #1 above = huge inventories.

3. Mortgage rates will rise and settle in around 6%+/-.

4. Builders will begin building...slowly, a result of pent up demand for new construction and a loosening of credit by the banks. Many builders have been sitting on land already approved and ready to be built upon.

5. A lot of prospective move-up buyers will continue to stay where they are.

6. The apartment/rental sector will make gains, the result of young Americans seeking escape from family homes in favor of their own living accommodations, but wary of the housing market.

7. There will be no Government Sponsored Entity (GSE) reform of Fannie Mae and Freddie Mac. There will be lots of talk and posturing, but no reform.

8. Prices will stabilize on lower end properties and decline less on higher end properties (over $1.5 million).

9. The term "communication" will take on a new meaning among real estate agents as ever advancing technology allows for better dissemination of information, particularly on cell and smartphones. Tech savvy real estate companies and agents will provide free branded real estate applications (apps) to clients and customers that are cross-platform capable. (For example... Text: RELIST to 87778)

10. Jobs will remain the key to recovery. According to the chief economist for the National association of REALTORS, with a gain of 200,000 jobs per month, a full recovery will take 6.3 years; with 300,000 jobs/month: 3.2 years; with 400,000 jobs/month: 1.2 years. And if we can find a way to create 500,000 jobs per month...well, we will have recovered.

There you have it. Not the rosiest picture imaginable, but we all knew that climbing out of a recession would not be easy... or quick.

The good news?

A lot of real estate transactions will take place in 2011, despite the market. Reasonable sellers, savvy buyers, and tech and service-centered real estate agents will win the day.

Best regards,

Jay Burnham, VP
Coldwell Banker Residential Brokerage
North Shore Real Estate, Massachusetts

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