As we begin 2012, there is a great deal of BUZZ in real estate circles about what the New Year will bring. Industry leaders on a national level disagree about whether or not the market has hit the proverbial bottom. Some argue that prices have further to fall; others are convinced that we have turned the corner, and that the economy is on the upswing with the real estate market bringing up the rear.
With no tax credit stimulus in the marketplace this past year, we held our own. One can conclude that compared to an artificially inflated market last year, a flat market in 2011 was a positive sign of slow but determined recovery. At Liz Moore & Associates, we were fortunate to enjoy a positive sales trend that began in July and continued for the last 5 months of 2011.
The market is definitely favoring sellers who are positioned properly – those who are aggressively priced and in move in condition are now selling in less than 4 months on average. This is despite 3 times as much available inventory, which won’t dramatically decrease any time soon, thanks to the continuing onslaught of foreclosures. This underscores the importance of proper pricing, and investing the sweat equity in making necessary cosmetic improvements prior to putting your home on the market.
Here is what I see in the coming 12 months:
Interest Rates are likely to increase slightly, although not a lot. It’s logical to me that the basic principles of economic theory apply…so, as the economy begins to gain momentum, interest rates are bound to lead the way. Although this is good news for our stock portfolios, it will have an adverse affect on home sales. Although consumer confidence will increase with the recovering economy, fewer buyers will be able to afford what they want, with the combination of rising interest rates and tighter lending guidelines. My message here remains the same as last year: If a home purchase is on your New Year resolution list, buy early in the year, as interest rates have a much greater impact than most realize.
Consumer Confidence will grow as the economy slowly shows signs of recovery. As we have learned from market cycle history, the first buyers back in the market are investors, and we are seeing that now, particularly in the lower price ranges. The next wave of buyers will come as consumers realize that interest rates will rise, and moves need to be made ASAP to take advantage of what has been a 4 year streak of historically low rates. As a result, we will see sales increase slightly over 2010-2011 levels. The National Association of REALTORS is predicting a modest 5% gain in national sales this year. I believe we will enjoy a slightly higher gain in our local markets, perhaps as much as 7-8%.
Foreclosures and REO inventory will increase in 2012, as the banks continue to sort through the regulatory mess that they have created over the past 2 years. The good news is that we are much wiser and more prepared, and agents are able to guide clients through the process much more efficiently than we did when the foreclosure crisis began. As a result, inventory levels will remain high; however, aggressively priced homes in move in condition will continue to sell in reasonable time (3-5 months).
Prices will remain stable. Prices are neighborhood specific, and some areas are definitely balancing faster than others; however, I believe that we won’t see any dramatic changes (up or down) in our local median sales price this year (or next, for that matter).
If a move in 2012 is on your New Year resolution list, I would love to recommend the right agent to make it happen! Just contact me at 757.645.4106 or liz@lizmoore.com.
The Liz Moore Insider is the corporate blog for Liz Moore & Associates. Designed by Liz and her marketing team to serve as a library of resources, tools, and ideas for our agents and staff, the Liz Moore Insider offers a “sneak peak” into our company and culture. To schedule a confidential interview or to request information about a real estate career with Liz Moore & Associates, you can reach Liz at liz@lizmoore.com, or Lynnette Tully, our Chief Online Strategist, at lynnettetully@lizmoore.com. Or, call us any time at 757.873.2707 in Newport News, or 757.645.4106 in Williamsburg.
