Seeing how we’ve gotten to the last week of 2011, I figured now was a perfect time to talk about what real estate looks like next year, in 2012. Unfortunately, it hasn’t been the greatest housing market we’ve seen. Home values in 2011 were still low, more people are renting, and others are having a harder time obtaining credit to purchase a house. Here are some of my predictions for the upcoming year…
1. Disappointment over missed opportunities. I think a lot of people might be kicking themselves for not taking the time to refinance their current mortgage or purchase an investment property at a rock-bottom price. I’m not positive as to how long rates will stay low (could be another few years), but it’s best to strike while it’s hot! And I’m going to admit that they’re not going to get much lower than they already are. So if you’re in the market to do either of those things, now is the time!
2. I see trouble brewing with the HARP guidelines. HARP, again, is the Home Affordable Refinance Program that I had written about previously. This was a chance for homeowners to be able to refinance and get a lower interest rate, even though their house isn’t worth what it once used to be. Also, the loan has to be owned by Freddie Mac or Fannie Mae. A lot of these lenders are not requiring appraisals, which is great for homeowners, but I see another problem. I have a hard time believing these lenders will be okay without an appraisal because they’re going to be liable for it in the future and if the homeowner defaults down the road.
3. A continuation of low home prices. This is largely due to the amount of foreclosures on the market that are driving down the values of the surrounding homes. This isn’t going to change in the next year, as the economy is still struggling to rebound and many people are still unemployed and underwater on their mortgages. Once all the distressed inventory is sold (who knows when that will be?) we’ll be starting to see a shift with home values steadily increasing.
4) Credit guidelines to remain tight. For the reasons stated above, such as the amount of foreclosures and short sales and unemployment and a bad economy, the lenders won’t be doing anything to release the grip they have on approving people to purchase homes. They’re struggling enough as it is with all the delinquent loans that they are being extra stringent in awarding new ones. I don’t see that changing anytime soon.
Do you agree with my predictions? Are there any that I haven’t mentioned that you believe will happen? I’d love to hear your comments! And a very Happy New Year to all my readers!