Confused about the state of the US real estate market today? Worried about the recent rise in mortgage rates? Wondering about home prices trends in 2012? Concerned about how foreclosures and short sales will impact your Silicon Valley neighborhood in 2012?
You are not the only one given the sheer amount of blogging and news available and sometimes conflicting about real estate forecasts for 2012 and beyond.
Here is a personal opinion of where I think that Real Estate fundamentals will go in 2012 based on my daily exposure to homes buyers and sellers on the San Jose and Silicon Valley Real Estate Market.
The recent spike in mortgage rates (above 4%), inspired by encouraging economic news abroad (Greece) and domestically (US hiring) should not let us forget that unemployment rate (9.1%) is still at one of the highest levels since the Great Depression. Remember that stock and bond markets are highly volatile and rise and fall in milliseconds on good or bad news, partly due to electronic and high frequency trading, which account today for up to 70% of transactions. This is the reason why rates are already back under 4%.
Just remember that mortgage rates remain at historically low levels (lowest rates in 6 decades!) and that long term trends and initiatives to keep rates down (Operation Twist by the FED for instance) should prevail and ensure that rates are kept low. The intent to keep rates at their current levels is palpable and is in the collective interest of not just home borrowers and consumers, but also ailing countries (such as Greece) on the verge of borrowing billions just to keep going.
From the perspective of a Real Estate Agent, low rates, current & upcoming housing initiatives should "incentivize" loan mods and facilitate refinancing for those who can.
The role of the Realtor though is to help those who cannot and negotiate the most favorable outcome, in particular helping distressed home owners to achieve a successful short sale. By the way, there is no doubt in my mind that a well-packaged, timely-filed short sale case with proactive follow-up by the Agent has the highest chance to get accepted by lenders. But I digress...
The rules of borrowing have changed though: loan demand is high but few are accepted. Be prepare to face a reality check wen applying. Providing your past lending history and personal finances are in order, you will be granted what you can afford, no more.
As a result, I anticipate that mortgage rates will remain low in 2012 to facilitate in particular government-sponsored and private refinancing of home owners deemed to be financially responsible but also encourage home ownership (and construction) at the level where borrowers can afford it.
© Sophia Delacotte CDPE, SFR, CHS
San Jose Realtor
Cell: (408) 717-2575