Housing Market Predictions for 2012 (excerpt)
February 17, 2012
Housing Market Predictions for 2012 (excerpt): Hope but Not Out of the Woods Yet
February 2012
While we're not out of the woods yet, as we end the year it's clear that the nation's real estate balance sheet is slowly turning around.
If you want to turn around the housing market, you have to create jobs that pay enough for someone to buy a home and afford their mortgage, real estate tax and insurance premium payments.
"Most Americans expect no improvement in their personal financial situation in the next 12 months and will likely remain wary about undertaking the significant financial obligation associated with homeownership until their view of their income, expenses, and job security heads in a more positive direction," noted Doug Duncan, vice president and chief economist of Fannie Mae.
But in a surprising turnaround, Fannie Mae's November National Housing Survey found that homeowners believe that their home value will rise 0.2 percent over the next year. This is the first time in six months that home price expectations moved from negative to positive territory.
"Though their home price expectations have become slightly positive, consumers remain concerned about the direction of the economy and continue to view their household finances as being relatively flat," Duncan added
Another boost to the housing market is that mortgage interest rates remain under 4 percent for a 30-year fixed-rate mortgage.
Looking forward, the biggest indication that the housing market might begin to normalize is that the number of homeowners who are seriously delinquent in their loan payments is shrinking.
While still far above the pre-recession average of 1.8 percent, the numbers reflect the fact that lenders are starting to process more foreclosures. While that isn't good news for the families living in those properties, processing the huge backlog of foreclosures generated with the robo-signing debacle means there should be less negative pressure on home prices going forward.
Even with all of this better news, it could still take another few years for the housing market to shift into normal. But hope remains that 2012 will be a better year for real estate.
Ilyce Glink, CBS MoneyWatch
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