Five Realtors Bring Local Perspective to Real Estate Predictions
Because they are so general, national perspectives on real estate recovery only go so far. So though we covered some of those perspectives before the new year, we’d like to get the local agent, the man and woman on the street, to weigh in on individual markets. And that’s what we’ll focus on today: Five ZipRealty Realtors assess their territories for signs of recovery in 2012.
Sabrina Jacunski, whose territory is Richmond, VA, says 2012 won’t be better if lenders don’t get on board. “In 3 years with Zip I have had only six canceled deals; five of those were in 2011.” Sabrina understands that the key to real estate recovery is responsible homeownership, but her point is that process is a two-way street. Buyers and sellers need to be realistic, yes; but banks need to figure out how to start awarding mortgages faster to qualified applicants.
Positive Signs Come from Negative Ones
One of the most devastating side-effects of real estate’s melt-down has been the flood of distressed properties on the market. Yet even this dark cloud of a problem has a silver lining in 2012.
Adam Bray-Ali, who works in Zip’s Southern California territory of Los Angeles, sees the short sale process as one that’s becoming less of a quagmire.
“For me, the big change in the market for 2012 from 2010-2011 is that there is a broad understanding of the short sale process in the marketplace with less of a wild west theme to the process.”
Inventory as both Friend and Foe
In Adam’s local market, there is still a large inventory of distressed property, offering bargains in areas where value has declined at high rates over the past four years. But, says Adam, “the price declines are now slowing and there appears to be some stability in pricing with an understanding that more foreclosures and/or short sales will be coming to market in the next 24-36 months.”
“The signs of recovery in my local market have been busier open houses on the weekends, and more REO/ Bank Owned properties that have received multiple offers. I am currently in escrow on a property in Canyon Country and my buyer had to submit an offer that was thousands of dollars over the listed price to get his offer accepted, since there were multiple offers on the property.”
Blake Russell, agent in California’s hard hit capital city, also sees signs of recovery. In Sacramento, “there are some signs that we may be hitting bottom and turning around slightly. Year over year from November 2010 to November 2011, single family homes saw an increase in sold units of 9.3%, however prices still trended down by 9.7% over the same time period because of the number of foreclosures that were sold.
One positive trend for prices is a significant drop in inventory over the time period. While in November 2010 there was a 4.2 month supply, we are currently sitting on only a 2.5 month supply, whereas a balanced market between buyers and sellers is typically a 6 month supply of inventory. Inventory is calculated by taking the number of homes currently on the market and dividing that number by the rate of absorption. If we don't see a significant uptick in listings heading into the spring of 2011 and maintain the current level of absorption, that will probably bode well for the market.”
Advice to buyers
All of us have heard it’s a “buyer’s market” out there, and no one really expects that to change nationally anytime soon. But to succeed as a buyer isn’t quite as easy as that term, “buyer’s market” makes it sound, something Sabrina Jacunski has already pointed out here. Adam advises his clients that “Low interest rates continue to provide excellent financing for those that qualify but knowing what properties will, and will not, qualify for FHA approved financing is critical for buyers in today's market.”
Advice to sellers
All the agents we spoke to advise their clients to put their best foot forward in selling their homes. Adam says “For homeowners looking to sell, the best way to maximize the sales price is to carefully clean, repair and stage a home for sale. The top properties still attract multiple offers at every price point, but buyers are very picky and clearing all issues prior to coming to market is critical.”
Dominic Carano, working in Northern California’s Discovery Bay area, sees the low interest rate as blessing and curse: Until interest rates show signs of rising, which won’t likely happen in the near future (especially in an election year) “there is no incentive for many seasoned buyers to purchase.” So while sellers may not be able to attract as easily buyers who are in their second or third real estate transaction, there are two other markets becoming stronger. In 2012, Dominic predicts “investors and renters” to be big real estate clients: Investors could be enticed by low interest rates and incredible bargains (that many think are beginning to disappear); renters could become first-time buyers, enticed by the same factors that lure investors. Of course, we’ll need the banks to help out with mortgages for any of this activity to actually take place.
In the end, while national perspectives on American real estate in 2012 are valuable in a broad sense, each of us needs to understand the small scale, micro-climate of the place we care about—the one we’re interested in buying or selling in. And for that, we need to find a local real estate agent whose experience and expertise can guide us. Start your search for an agent with ZipRealty’s Realtor Directory.
And in the meantime, Happy New Year from ZipRealty!