First off, let me apologize for the length, but I wanted to give as much vital information as possible to the reader concerning a very important subject...
How much information do we really need? As much as possible to make informed decisions because we can never learn enough!
Being a real estate agent, I look forward to gathering as much information as possible. I enjoy keeping up with reports, articles, breaking news, reviewing graphs, etc. It’s my job to be informative for my customers and clients. It’s a responsibility I take very seriously. Trends may come and go, but keeping on top of all of what’s going on is key and necessary to be successful.
In reviewing last year:
Yes, prices did drop and many houses still did sell. On the average, homes remained on the market longer. Not a lot of buyers were out there but for those that were – they wanted move-in ready homes. Buyers had a right to be very picky with all that was available. Confidence was shaky throughout the year, but by the end of 2011, consumer confidence picked up.
According to a MLSLI report for Nassau County, it has been reported there was a closed median home price of $385,000 representing a 2.5% decline from $395,000 reported in from the year before (December 2010). The number of contracted sales in December 2011 was 5.2% higher than in December 2010. This is definitely a positive sign for the housing market. Also, just last week rates for a 30-year mortgage hit under 4%! A 30-year mortgage was at 3.89% and for a 15-year mortgage, 3.16%!
“U.S. Home Prices Down in 2011, but Market Stability Forecasted for 2012. While year-over-year prices notched down in 2011, prices are expected to see slight uptick in 2012, the first time in positive territory since 2006,” according to Clear Capital®
Unfortunately, last year according to The National Association of Realtors (NAR), there were reports that many buyers had difficulty in obtaining a mortgage because of tighter credit restrictions. It kept many qualified home buyers from purchasing homes, which could have helped absorb our excess inventories of homes in foreclosure.
Foreclosures will increase which, in turn, will bring down the value of the other homes in the neighborhood, along with neighboring house prices, too. The whole debacle of the distressed homes involved in the 2010 robo-signing fiasco will continue to be released to sell and at discounted prices (the shadow inventory). Meaning, an infusion of more homes on the market which will continue to influence the softening of home prices.
According to a report posted on DSNEWS:
“In the Northeast, particularly in New York, Fitch* sees large price declines on the horizon. In part, this is because prices in the region have not fallen as much as in other regions of the country and remain overvalued. Prices in the Northeast are 36 percent above their 2000 levels.”
....And overall nationally,
“This decline is the result of high unemployment, excess inventory, and restrictive lending standards, also according to Fitch.”
*Fitch Research is an online subscription service that provides ratings and research as well as leading analytical tools and ongoing surveillance.
Predictions of prices dropping the first half of 2012 can put homeowners deeper in negative equity. Homeowners with negative equity may strategically default on their mortgage (not paying their mortgage on purpose). The banks will hopefully take more preventative steps in easing up on requirements for a short sale process.
Posted on Bankrate.com:
The revamped Home Affordable Refinance Program, or HARP 2.0 that was announced in November 2011, allows borrowers to refinance and grab a lower mortgage rate regardless of how deeply underwater they are. The previous version of HARP did not allow refinances for borrowers who owed more than 125 percent of the value of their homes.
The NAR is urging lenders to take more aggressive steps to modify loans to keep struggling families in their homes. (By reducing their monthly mortgage payments it will help more families remain current on their mortgage and allow them to remain in their home). A much needed push to help reduce the impact of foreclosures on local home prices and to help towards recovery.
NAR also surveys homebuyers and sellers each year to uncover housing trends and monitor changes taking place in the industry. This year's report highlights a number of trends that haven't been seen in years.
Here are just 11 highlights from the 2011 report.
1. In 2011, 37% of homebuyers were first-time buyers which were down from 50% in 2010.
2. Last year, 88% of homebuyers used the Internet to search for a home. That number was down slightly from a high of 90% in 2009.
3. The typical homebuyer searched for 12 weeks and viewed 12 homes.
4. The number of buyers who purchased their home through a real estate agent or broker climbed to 89% - a share that has steadily increased from 69% in 2001.
5. Nearly 1 out of 4 buyers said the application and approval process was "somewhat more difficult" than expected and 16% reported it was "much more difficult" than expected.
6. About half of home sellers traded up to a larger and more expensive home and 60% traded up to a new home.
7. The top 3 factors influencing neighborhood choice were: the quality of the neighborhood, the convenience to job, and the overall affordability of homes.
8. The typical seller lived in their home for 9 years. That number has increased from 6 years in 2007.
9. Although 61% of sellers said they reduced their asking price at least once, the average home sold for 95% of the listing price.
10. Only 10% of sellers sold their homes without the assistance of a real estate agent. Of those people, 40% knew the buyer prior to the sale.
11. The typical "for sale by owner" home sold for $150,000 compared to $215,000 for the average agent-assisted home sale.
Upticks? Declines? - No wonder it's so confusing with conflicting reports...
...But, bottom line - it always boils down to Supply and Demand!
Posted on KCM, (Keeping Current Matters) blog are some GREAT points regarding supply and demand questions:
Questions about Demand:
Will this be the year that the 5.9 million adults between the ages of 25 and 34 that are still living with their parents decide to purchase a home of their own?
With mortgage payments lower than rent payments in the majority of the country, will first time buyers finally decide it makes more financial sense to buy rather than rent?
Will the baby boomers take advantage of the great deals available and start purchasing vacation and retirement homes?
Will investors continue to purchase large quantities of distressed properties?
Will hedge funds negotiate a deal with the banks for bulk purchases of foreclosures?
Questions about Supply:
Will 2012 be the year that builders again increase inventories of newly constructed homes?
Will baby boomers put their primary residences up for sale and relocate to their retirement destinations?
Will 2012 be the year that the shadow inventory of foreclosures finally makes its way to market?
If prices depreciate, it will force more homes into a negative equity situation. Will this create another surge in short sales and foreclosures?
Will the government put together a plan to convert large numbers of foreclosures into rental properties?
If you’re a homeowner who NEEDS to sell, NOW is a good time to get your home on the market before the spring market hits and an abundance of others (distressed) come on, too.
If you’re a buyer, when the spring market hits you will have a lot to choose from and get a great deal with low % rates, too. Homeownership is still a great investment.
Talk to your trusted real estate professional for any questions or concerns you may have.
Sources: NAR, MLSLI, LIBOR, KCM, Marketwatch, DSNews, Fitch Research, Clear Capital, Bankrate.com