Mortgage Predictions for 2012
It’s the time of year that we look ahead and attempt to give our best guesses about the market, the industry, and the effects they may have. So, here are my thoughts about the mortgage world:
Interest Rates Should Be Stable
With a faltering economy nationally and worldwide, including pessimistic estimates for employment, there is little chance that the Fed will risk increasing rates which would jeopardize any recovery. Couple that with a Presidential Election in November and conventional wisdom, and we’ll see rates hovering in the same neighborhood for most of 2012.
Mortgage Costs Will Increase
Quietly tucked away in those bills passed in Congress to extend the payroll tax cuts before the holidays was an increase of 10 basis points in the guarantee fees on loans sold to Fannie Mae and Freddie Mac. That will translate into .10% higher interest rates (which would be $4000 extra on a $200,000 loan over 30 years). Interestingly enough, the additional revenue is not going to Fannie or Freddie to help with defaulted loans, but rather going to the US Treasury to make up for the payroll tax cut….go figure.
The Mortgage Interest Deduction Will Be Challenged
Look for people of a certain income level to lose their write off as a measure to increase revenue. Taking away from the wealthy as a way to raise governmental revenue is politically strategic. It is unlikely everyone will lose the deduction (political suicide), but that top 1%…watch out.
Loan Products Will Expand
Common sense lending will start creeping back. Large down payments will liberalize credit and income standards. This will likely begin with local banks who are comfortable with appraised values. I’m not calling for a return to the madness, but some loans that are low risk are not being done today. Anticipate some lenders expanding their guidelines.
Don’t be shocked by a lowering of FHA loan limits and/or an increase in the FHA Up Front Mortgage Insurance Premium either. Overall, mortgages should give people more reasons to buy homes in 2012 as the economic recovery is strongly tied to housing. Given that most people vote their own personal economy rather than policy beliefs, I expect support by those who are looking to be re-elected. Mortgage rates are low..
5 Real Estate Trends to Look For in 2012
by The KCM Crew on January 3, 2012
Predicting trends during the most volatile housing market in American real estate history is no easy task.
We strongly believe these are the five real estate items we should keep an eye on in 2012:
1. Buyers Will Return
In 2011, a lack of consumer confidence in the overall economy dramatically impacted the housing market. Buyers were afraid to make a purchasing decision on any big ticket item. By the end of 2011, consumer confidence began to return and sales increased. Economic conditions will continue to improve throughout 2012 and consumer sentiment will solidify. Once that happens, home buyers will realize that now is the time to buy.
2. Foreclosures Will Increase
The ‘shadow inventory’ of foreclosures which has been growing since the robo-signing challenges of late 2010 will finally be introduced to the market. Distressed properties sell at discounted prices. They will impact the housing values of the non-distressed homes in the area.
3. Prices Will Soften
As more and more foreclosures come to market, there will be greater downward pressure on the values of houses in the region. Foreclosures impact values of non-distressed properties in two ways:
They will eat up some of the buyer demand in the market.
They will impact the appraisal on ALL transactions in the area.
An increase in foreclosures will have a negative impact on values. This will cause more homes to be underwater.
4. Short Sales Will Increase
As mentioned above, we strongly believe that home prices will soften through at least the first half of 2012. Falling prices will force more homeowners into a position of negative equity. Negative equity is one of the triggers that cause people to strategically default on their mortgage obligations. If this happens, there could be an increase in the number of foreclosures. However, we predict that banks will take preventative measures which will help many of these homes avoid foreclosure by easing the requirements in the short sale process for both homeowners and real estate professionals.
5. Great Agents Will Be VERY Successful
Real Estate professionals who have invested the money, time and energy to truly understand what is happening and why it is happening will separate themselves from their competition and do very well this year.
Those who take that next step of learning how to simply and effectively communicate the market to their clients will be seen as industry leaders. These experts will dominate their markets.
This blog will help you with the what and the why. If you are looking for help with how to communicate this information to clients and customers, go here. Mortgage Rates are low…
The Tuscan Villas Richmond was designed in 1928 by Richmond architect Bascom Rowlett, the architect of other well-appointed apartment buildings such as Rixey Court on Monument Avenue and The English Village on Grove Avenue. The Tuscan Villas Richmond were converted to condominiums in the 1980’s. The building is one of the best examples of Mediterranean influenced architecture in Richmond. It is a three-story building with a plain stucco finish and a low-pitched clay tile roof. Four ells create three courtyards with crepe myrtle and liriope lined paths. Decorative sculpture, recessed loggias, iron balconies, and cartouches, and the sun-scorched yellow stucco and verdigris trim paint add to the building’s Italian allure. The five building segments are named for regions in Tuscany: the Lucca, The Siena, The Leghorn, The Florence, and The Pisa. From the Historic Richmond Foundation
