1. Home prices are likely to remain stable, possibly increase
I just started a tweet
on potential trends of the US Real Estate Market in 2012 and thought I might as well write a short blog to substantiate my thoughts:
I do not believe in the triple dip of the housing market. I believe that lenders will adopt a responsible attitude towards short sales and walk away from foreclosures and associated costs if they can afford it. The recent increase in the Notice of Default (NOD) does not mean that all homeowners who received it will end up foreclosed. If most of these properties ended up being sold as short sales at current market prices (see 3. below), the market should be able to absorb these properties (in better state than REOs) without dipping too much. Note that the total amount of properties available for sale has dried up in most areas, including in Silicon Valley, and an influx of new properties will be welcome by both Realtors and potential home buyers. This low inventory could also mean that prices might go up depending on the willingness of home buyers to return to the market.
2. Mortgage Rates are likely to remain low and may decrease further
You all heard recently that the Federal Reserve is gearing up to buy on a large scale an increased amount of mortgage-backed securities. Together with the fact that Fannie Mae and Freddie Mac should no longer require warranties and representations from lenders in case of 'delinquent loans', this is likely to relieve the pressure on banks, hence lower fees and consequently lower interest rates.
3. Rise in Acceptance of Short Sales
By now, most major US lenders (Bank Of America, Chase, etc) are piloting Short Sales Assistance programs in 'Foreclosed states' like Florida to incentivize distressed homeowners to accept a short sale rather than initiate a foreclosure. This means that properties will be repossessed by lenders in much better condition and sold at better prices, hence sustaining housing market prices (as stated in 1.).
Not surprisingly and a tad late, banks have come to the realization that they are saving money and time by preempting short sales negotiations, even in spite of the pay-out (ranging from $3 to $25K) to distressed home owners.
If all goes well, 2012 could go down in Real Estate History as the Year of Stabilization for the US Housing Market thanks to a collective alignment between the Government , GSEs, lenders and distressed home owners.
© Sophia Delacotte CDPE, SFR, CHS
San Jose Realtor
Cell: (408) 717-2575