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Real Estate Viewpoint: Will 2012 make out development?

Delhi Central - Thursday, November 24, 2011 8:42:44 PM


We’ve seen the effects of rigid mortgage conditions over the last year. Existing and new homes sales have struggled and we are now left with sizable restricted demand. Will this trend continue into 2012?
 
For starters, consumer prices fell in October, meaning low wage workers and others struggling to make ends meet will find more affordability. Additionally, according to experts, this decline gives the Federal Reserve more wiggle room when it comes to policy making should the economy decline.

The recent developments in the European debt crisis have had their affects on American markets.
Yet, affordability is the name of the game for 2012.According to the National Association of Realtors reports, next year will be one of the best years on record for housing affordability.

Housing affordability conditions, based on the relationship between median home prices, mortgage interest rates, and median family income, have been at a record high this year. Very favorable affordability conditions will dominate next year as well, which will probably be the second best year on record dating back to 1970.

NAR President Phipps says that "mortgage availability remains a real concern since the private market has yet to return. While the housing market is still in recovery, we firmly believe that lower loan limits will only further restrict liquidity in mortgage markets." 

Home sales could start to see some improvement in the New Year, though. Existing-home sales are expected to rise 4 to 5 percent.
While mortgage rates may rise slightly, they will still be near historic lows. In fact, the Federal Reserve is committed to keeping rates low through mid-2013.

The latest reports on the remodeling market show that today’s low rates may be allowing stay put homeowners the opportunity to refinance and funnel extra funds into home improvements. According to Build Fax the remodeling market is up 34 percent over September 2010. They report the top projects are roof remodels/replacements followed by deck and bathroom remodels.

Nearly two and a half years after the recession the economy and housing market continue to struggle, but recent stats and surveys are revealing that a change could be on the prospect for 2012. For now, affordability and interest rates are making for tempting deals for today’s buyers.
 


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