More predictions for the year ahead
Editor’s Note: This is the second of a two-part story forecasting real estate experts’ top predictions for the market in 2012.
The year brings with it many questions about the fate of real estate — and possibly the world. Is the real estate market ready for the onslaught of short sales and foreclosures we’ve been hearing about? Will home prices rise in 2012, and if so, could we see a radical upswing in the nation’s median home? Or will they rise only slightly, not at all, or perhaps drop?
Will the lending market remain tight until finally someone will do something about it?
Perhaps the most important question is: Will we all be able to look back and say that 2011 was the bottom of the market?
Regardless of what happens in the market, maybe the best hope for real estate, and the world as well, is that Nostradamus and the Mayans were wrong about Dec. 21, 2012. But it is an election year.
Three Orange County real estate experts offered their top predictions for 2012.
SARI WARD, REALTOR, PRUDENTIAL CALIFORNIA REALTY IN LAGUNA
NIGUEL
1) Home prices are on the rise. Even the higher end ZIP codes like Newport Beach and Laguna Beach are showing signs of recovery. For the three months between August 2011 and October 2011 these two areas showed price gains over the previous period — for ZIP codes 92663 and 92660. Other ZIP codes in O.C. are not showing gains, but there are signs that 2011 might be our bottom.
2) More opportunities for homebuyers and investors. First-time homebuyers are cashing in with conforming loans requiring relatively low down payments. Investors scooping up homes without paying for a mortgage are seeing that now is the time to invest in rental properties with these historically low prices.
3) More opportunities for sellers. People who are selling and are also buying another home can leverage the buying conditions out there. Whether sellers are moving up or moving down, they will be getting more house than they would have if they had made the move three or four years ago. Buyer confidence is growing rapidly, which has caused multiple offers for those homes priced properly and with an effective marketing strategy.
4) Loosening of some lending guidelines. It’s tough to qualify for a loan these days. People with good jobs, good income and good savings are finding it challenging and frustrating to go through the process. The banks take too long and the bureaucracy is a nightmare for many borrowers. Something will have to change in 2012 to keep up with the demand for new housing.
5) More demand. All the people who were forced to short sale their home and rent for the past few years will be back in the market in 2012. Rent in Orange County has skyrocketed. It’s more affordable to own with the prices so low and interest rates at 40-year lows. Also, people who used to own then rented want to own again and will be able to qualify again to be a homeowner in 2012.
SALLY DOHERTY, MORTGAGE LOAN OFFICER, NEW AMERICAN FUNDING IN IRVINE
1) Mortgage rates will remain low, at least through the first quarter. However, fees charged by Fannie Mae and Freddie Mac are likely to increase and will be passed to the borrower, effectively resulting in a higher interest rate or pricing.
2) There are predictions that lenders are poised to release a backlog of (real estate owned properties) in the near future. Locally, this is good news for buyers because it will expand the inventory of homes. Whether or not it will adversely affect housing prices will depend on the rate REOs are released. It’s a highly localized matter.
3) Lenders will continue to tighten underwriting guidelines, as repurchases from Fannie Mae and Freddie Mac remain a serious issue. However, reports show that the delinquency rate of loans extended more recently are starting to decline, but I don’t expect any significant loosening of credit standards.
4) As rates remain low, housing inventory increases and the job situation stabilizes, I expect more buying activity in our area, especially in the low to moderate price points. The real estate community, including real estate agents and loan officers, are continuing to educate consumers to counteract the negative media reporting and to get the word out that there are low down payment options available and that it is possible to get a mortgage loan.
See JERGLER, page C21
