As the first quarter of the new year gets into full gear, the real estate market finds itself trying to still solve the foreclosure crisis and recover from nearly five years of falling prices, rising inventory, and lackluster demand.
Will the new year be any different? What changes and trends will we notice in 2012 – and which, in particular, can be observed over the next few months?
The Bottom May Be Near
It would be premature to say that we have reached the bottom of the housing market as far as housing prices are concerned. We expect prices to continue to fall or at least remain stagnant in most of the country, with pockets of positive growth here and there.
Still, the much-awaited bottom of the market may be near. It won’t happen in the first quarter, but aggressive investors should think about this: we could look back later and see that the first quarter of 2012 was the perfect time to buy.
Refinancing Goes High; Rates Stay Low
Historically-low interest rates will remain another hot trend throughout the first quarter, as the Federal Reserve has shown no signs of allowing rates to rise. Rates will continue to remain low, which will in turn encourage more people to refinance – especially once the new provisions of the old Home Affordable Refinance Program take full effect in a month or two.
The upsurge in demand for the revised program could help thousands of underwater homeowners, which in turn could lower the foreclosure rate for the second and third quarters and cause housing prices to gain traction later on in the year – this time in the right direction.
More Competition for Investors
Yet another trend that is heating up quite nicely for investors is competition – and the effects aren’t entirely bad. More competition from an increased number of investors – particularly foreign entrepreneurs flush with cash – means that lenders are more apt to sell foreclosures and short sales on a faster timeline. This in turn means you could capitalize on these distressed properties much more quickly than you could last year.
Those who have been learning their way around the short-sale market could be the dark-horse winners of the market for 2012 if they pay close attention, but virtually anything in the foreclosure market is gold waiting to be discovered.
