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What To Expect in Real Estate for 2012 – Jeff’s Real Estate Predictions

by: Jeff Quintin, on January 19, 2012 - Uncategorized

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Very often, Realtors are asked about the current state of the real estate market and though it’s an ever-changing industry involving volatility at times and major upswings at others, knowledge alone can change one’s experiences in real estate. ( I did this last year as well. Check out my 2011 predictions here.) So to provide some insight and guidance into what we can expect to see in the coming year.  Based on years of experience and after following trends that have led us up to this point, here are ten real estate things that I predict will be occurring in 2012.

Unremarkable Appreciation Values

Even though we can see the market heading in the right direction, it appears that 2012 will be yet another year where there will be little to almost no appreciation on properties.  Prices will continue to fall, often as a result of buyers bidding that driving down the very prices they are concerned about as homeowners.   Keeping in mind that still more inventory will be coming in this year, noteworthy appreciation is still a thing of the distant future.

Unscrupulous Short Sale Activity

Surprisingly, there is a lot of short sale fraud going on in the nation and as short sales continue to control a sizable portion of the market we will continue to see fraudulent activity in that area of real estate.  Seller payoffs by investors wishing to cash in on short sale deals, secondary lien holder payoffs or cases where a buyer purchases a short sale only to resell it back to the seller again – all are examples of what we are seeing and what we will see more of in 2012.

Government Programs Providing Little Relief

Though their hearts are in the right place, government agencies that are providing relief through programs such as HARP (Home Affordable Refinance Program) will continue to offer them however homeowners will receive little relief.  Loan modification programs stop the bleeding but they do not reduce the principal, effectively leaving homeowners to find themselves in default once again.

Bulk Foreclosure Sales

There has been significant controversy over the term “shadow inventory” in the recent past and this coming year a lot of this shadow inventory will find itself on the market.  Banks will unload many foreclosure properties on the market this year, selling them in bulk with the intent to sell them quickly and more efficiently.  The sale prices will also reflect this convenience for banks with discounts for buyers buying several properties at one time.

Short Sales On the Rise

As we have seen during the past few years, short sales have been a popular solution for homeowners facing default and a favorite for buyers looking for a great deal on a home.  In 2012 we will see short sale trends continuing to rise.  Looking at the numbers from 2009 to present, there is a huge upward trend on short sales that is predicted to be as many as 150,000 this year.

Veteran Loans Increasing

Now that the war in Iraq is over we will see a large number of veterans returning from overseas looking for housing.  Loans supported by the Veterans Administration will be on the rise this year across the nation with such benefits as no down payment or waived funding fees.

Lease Option Sales Offered By Banks

A new, and very viable, alternative for homeowners facing foreclosure is the concept of lease option sales.  More and more lenders are offering this option to homeowners as a chance for them to rebuild their financial lives yet remain in their homes.  Banks go ahead with foreclosure but then offer the same home back on a lease option.  With demonstrated timely payments as they rebuild their credit, homeowners will have a chance to buy back their home.

Renovations and Remodels Replacing New Purchases

The economy is improving but ever so slightly and as we deal with still very high unemployment numbers, the trends in real estate that is currently owned will reflect that.  Rather than move into new homes, we will see homeowners working to repair or renovate their existing homes to save money.

Mortgage Holders Will Move to Shorten Terms

Interest rates have been in the news for a long time and they will continue to dominate the real estate industry.  With no immediate change in the history low interest rates we have been seeing for the past two years or so, more and more people will move to shorter amortization terms and effectively pay their homes off in half the time, if not more.

Surge in Second Home Sales

Given the ripe market for buyers we will continue seeing a huge surge in the purchase of secondary properties this year.  Whether looking for resort locations, vacation properties, rental properties or even retirement homes – consumers will take advantage of the low prices, low interest rates and high inventory.