See More: Articles
Real Estate: Signs of Recovery in 2012?
Apr 11, 2012
What is predicted for the real estate market in 2012?
There is guarded optimism.
Inventories of houses declined 3.48 percent from September to October 2011, while median list prices were up 2.65 percent nationally year over year, reports Realtor.com.
Builder magazine predicts gradual recovery in 2012, though varied by market. The magazine also sees an increase in housing starts and more multifamily structures during the next two years.
Prospects vary greatly by region and city. Many analyst’s rosier predictions are community specific. (See promising real estate areas listed below.)
Local trends may be difficult to predict. Florida is a good example. In January 2011, Forbes magazine identified 10 cities expected to see the greatest decline in property values. Seven were in Florida, and the three worst were Deltona-Daytona Beach, Lakeland and Orlando. Prices in these markets will continue to drop for a couple of years, not leveling out until 2014, Forbes predicts.
Then, in August, the online publication 24/7 Wall Street identified 10 markets it said would likely drop by 10 percent in 2011. Three of the markets were in Florida. Home prices in Miami, for example, were predicted to drop 13 percent.
However, two months later, in November, data from Realty.com showed that some areas of Florida were beginning to see increases in list prices. In October 2011, Florida communities enjoyed the top five spots for markets with the largest median list price increases year over year. The Fort Myers and Miami metro areas saw the largest year-over-year increases, with median prices increasing 33 percent and 25 percent respectively. A November article for U.S. News & World Report, named Miami the No. 1 “turnaround” housing, with Orlando and Fort Myers at No. 2 and No. 3.
While median list prices in Florida are well below the peaks of several years ago, positive movement is occurring in some Florida communities.
It’s difficult to generalize about the future based upon how badly the housing crisis affected a region in the past. According to a September article in Builder magazine, Colorado, which was not affected by the housing crisis the way California and Nevada were, has three of the top 10 “healthiest” housing markets. But Florida, which was hard hit by the housing crisis, also had three of the top 10 healthiest markets.
One important factor affecting real estate markets is continued unemployment, which is holding back the housing market, Peltier says.
Bank of America/Merrill Lynch economist Michelle Meyer also sees a correlation between a weak labor market and a weak housing market. And 24/7 Wall Street examined data from 380 cities, finding that cities with high unemployment were more likely to see housing prices drop during 2012.
Household formation is suppressed, says Builder magazine, but predicts that, when it improves, people will be more likely to rent rather than own because of job loss fears.
Another factor is foreclosure rates, which vary regionally as well. Some states are particularly hard hit. For example, Nevada, California, Arizona, Florida and Michigan accounted for 53 percent of the foreclosures nationwide during October 2011.
Builder magazine blames elevated foreclosure rates, and resulting foreclosure sales at low prices, for depressing the normal demand for housing.
The Associated Press has an “economic stress test” based on unemployment, foreclosure and bankruptcy rates. In July, it reported that Nevada had the nation’s highest level of stress (and also led the nation in unemployment, foreclosures and bankruptcies), followed by California, Florida, Michigan and Arizona – the same five states that account for more than half of foreclosures.
Current, community-specific information on factors such as unemployment, foreclosures and housing starts can help buyers and sellers stay on top of housing market trends during 2012.
This was my first time working with auditors and I was bracing for a tough audit and tax experience, but Jim Larson and his engagement team of Bob Maleta and Hang Hoang were very patient, kind and accommodating in breaking down their complex questions into layperson’s terms I could understand.
Carol | Binstock
The Quixote Center