Is 2012 the Year of Recovery?

Last night was the big “ball drop” in Times Square to mark the end of 2011 and the beginning of 2012. And while the New Year always brings hope and promise for new beginnings, one big question is what will the New Year bring for the poor, beleaguered housing market?

Is 2012 the year of recovery?

Some experts say no and a few say, Hell No! But most agree that 2012 should bring about a gradual shift that will help set the stage for the recovery of the real estate market.  Since 2012 is a “BIG” and I mean big presidential election year, I predict there will be some type of stimulus, hope, or even the old smoke-and-mirrors type program to make people believe it’s all going to be okay.  This will help instill confidence in buyers.

Political machinations aside, there are a few other things going on that will help keep the market at least stable and continue to make it one of the best buyer’s markets (possibly) ever. 

1. Interest rates will most likely stay low. Maybe not at the record lows they are today but close and that keeps homes and mortgages affordable.
2. The number of homes going into foreclosure should slow down. I mean this has been going on for four years now and with improvements in the job market, defaults are going down. And most of people who couldn’t afford to keep their homes have already been foreclosed on.
3. The banks will hopefully be able to finally clear a lot of the bad loans either through the short sale process or the foreclosure process ultimately reducing the number of distressed homes on the market.
4. Current legislation allowing for tax relief if you sell your home short (less than you owe the bank) will prompt homeowners to get that done in 2012.
5. Rents will probably continue to rise. The amount of people who have lost their homes to foreclosure or short sale and cannot buy are forced to rent.  This will drive rental prices up which makes homeownership even more enticing to those who can buy.

All these factors will continue to make this one of the best times to buy a home in the past 50 years. The equity seller is still out of luck unless he wants a great deal moving up. But with all these conditions favorable to buyers and banks needing to dump their inventory, it will at least keep the housing market moving along. Houses will sell.

And then hopefully when the dust settles a year from now when the election is over and the distress sales are down; then maybe, just maybe we can be poised for a true market recovery.

But I remain optimistic as homeownership is still the ultimate American dream and living in South Orange County is one of the greatest places to be. … I predict that 2012 will be okay.

Happy New Year!