December 2011 Real Estate News Recap

Here at ZipCode, we’ve started off the new year by diving into our buyer series. With mortgage rates at unbelievable lows and markets beginning to heat up, 2012 is a great time to consider leaving your renting days behind. We’ve already gone over some of the factors that make this year a great time, but let’s take one final look at 2011 to get a better idea of where the housing market has been and where it is going.

 

2011: An Overview

A few of the year-end reports are rolling in, and there are very few surprises. 2011 was dismal, especially the first half of the year. Prices fell. More and more borrowers were underwater. The economy stank.

But the real estate market, though totally depressed, seemed to be hovering around a price bottom by the year’s end according to a few analysts.

Here are five of the top real estate stories from last year:

· In January, buyers and sellers got a chill when news rolled in that 2010 was a record year for foreclosure filings. (CBS)

· In April, the Office of the Comptroller of the Currency started taking action against some of the nation’s largest lenders for unsound foreclosure practices, including the robo-signing scandal. (CBS, Wall Street Journal)

· The rates for 30-year mortgages plummeted to below 4% in October (and as of yesterday, are at an all-time low of 3.89%). (MarketWatch, Bloomberg Businessweek)

· The FHA loan amount was lowered in October, then raised again in December through the end of 2012. (SFGate)

· The Home Affordable Refinance Program (HARP) was expanded in December. (SmartMoney)

Yikes… definitely not real estate’s greatest year or anything close to it, but in addition to some opportunities (super-low mortgage rates, governmental assistance programs), we also saw some signs of life as we crossed into 2012.

 

December’s Silver Lining

In 2011, there were a lot of homes in some stage of the foreclosure process, but the number of homes in foreclosure was down about a third from 2010 according to RealtyTrac. Not the best news, but certainly a sign of steady improvement! (Housing Views)

Prices of homes for sale fell 2.1% in 2011. Ouch! But this was the smallest decline since the market gain of 1.7% in 2006. That means falling prices are slowing down and stabilizing. And they are expected to gain ever so slightly in 2012! (Clear Capital)

REO saturation is also down to 24.8%. REOs have consistently held prices down, so as inventory clears up, we can expect prices to begin to heat up as well. (Clear Capital)

Finally, consumer sentiment is up, up, up, and is currently at its highest point in the last eight months. (Bloomberg Businessweek)

In sum, the real estate market appears to be stable, steady, and approaching growth on a national level.

 

Scanning the Horizon: Markets Ready to Rise

While it’s terrific that the housing market appears to be rousing itself from its listless state, don’t get too excited before you do your homework. Clear Capital’s report insists on one thing over and over: know your market.

About 40% of housing markets are predicted to be “stable”—so what about the other 60%? Clear Capital forecasts dramatic fluctuation in micromarkets, with some heating up as demand rises while others sink into even lower price medians.

Here are the forecasted top fifteen metro markets for 2012. See the rest of the markets here.

Chart 2: 2012 Forecast

50 Major U.S. Metro Markets Price Change (2012 Forecast)

Qtr/Qtr
Rank

 

Metropolitan Statistical Area

 

2012 Forecast Yr/Yr

 

2011 Observed Yr/Yr

 

2011 Observed Rank

1

 

Orlando, FL

 

11.7%

 

6.7%

 

2

2

 

Bakersfield, CA

 

11.1%

 

-2.6%

 

22

3

 

Washington, DC – Arlington, VA – Alexandria, VA

 

9.3%

 

3.5%

 

6

4

 

Phoenix, AZ – Mesa, AZ – Scottsdale, AZ

 

8.9%

 

1.5%

 

12

5

 

Miami, FL – Ft. Lauderdale, FL – Miami Beach, FL

 

8.8%

 

5.6%

 

3

6

 

Tampa, FL – St. Petersburg, FL – Clearwater, FL

 

7.4%

 

-0.6%

 

15

7

 

Dallas, TX – Fort Worth, TX – Arlington, TX

 

5.8%

 

2.7%

 

8

8

 

Jacksonville, FL

 

4.3%

 

1.7%

 

11

9

 

Cleveland, OH – Elyria, OH – Mentor, OH

 

4.2%

 

-1.1%

 

18

10

 

Honolulu, HI

 

3.2%

 

-0.8%

 

17

11

 

Houston, TX – Baytown, TX – Sugar Land, TX

 

3.0%

 

-0.8%

 

16

12

 

New York, NY – No. New Jersey, NJ – Long Island, NY

 

3.0%

 

1.2%

 

13

13

 

Memphis, TN

 

2.5%

 

-4.7%

 

33

14

 

Portland, OR – Vancouver, OR – Beaverton, OR

 

1.9%

 

-3.5%

 

27

15

 

Denver, CO – Aurora, CO

 

1.8%

 

3.3%

 

7

 

Buyers: Doing Your Homework Pays Off

So what can the savvy buyer do?

· Know the REO saturation in your desired neighborhood. Increasing REO saturation will likely drive prices on homes for sale down. The converse also holds true.

· Know the unemployment figures for the area. This number affects the whole local economy and will ripple into the local housing market as well.

· Know the inside scoop. Nothing beats local presence and knowledge. Check out what other homes are selling for. Talk to a realtor about what trends they see in your micromarket.

If you’ve done your homework and your micromarket is slowly gaining steam, 2012 may be the right time for you to buy a home.

 

Stay tuned for our next installment in our buyer series—all about financing, loans, and mortgages!