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Where Are House Prices Headed in 2012?

There is no shortage of opinions as to where home prices are headed in 2012. From Clear Capital’s expectation that prices will show a ‘slight uptick’ this year to Fitch’s projection that prices ‘will fall another 13 percent’, there seems to be no consensus as to where real estate values are headed. How can there be such a disparity of opinion among industry experts? Prices are determined by the relationship between supply and demand and there are many unanswered questions regarding both of these components.

Questions about Demand

Will this be the year that the 5.9 million adults between the ages of 25 and 34 that are still living with their parents decide to purchase a home of their own?

With mortgage payments lower than rent payments in the majority of the country, will first time buyers finally decide it makes more financial sense to buy rather than rent?

Will the baby boomers take advantage of the great deals available and start purchasing vacation and retirement homes?

Will investors continue to purchase large quantities of distressed properties?

Will hedge funds negotiate a deal with the banks for bulk purchases of foreclosures?

Questions about Supply

Will 2012 be the year that builders again increase inventories of newly constructed homes?

Will baby boomers put their primary residences up for sale and relocate to their retirement destinations?

Will 2012 be the year that the shadow inventory of foreclosures finally makes its way to market?

If prices depreciate, it will force more homes into a negative equity situation. Will this create another surge in short sales and foreclosures?

Will the government put together a plan to convert large numbers of foreclosures into rental properties?

Bottom Line

With so many unanswered questions regarding both the demand for housing and supply of properties, it is very difficult to determine where prices will be at the end of the year. We suggest you contact a local real estate professional to help you determine where values are headed in your area.


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6 replies
  1. Kurt Miller
    Kurt Miller says:

    THANK YOU!  With so many national institutions providing educated guesses about the future of pricing, it is wonderful to see a national institution present this as a question instead of a answer, and referring customers to a professional who knows the market in their region.

    Reply
  2. Msowers1
    Msowers1 says:

    There is something else to keep in mind. When sales do start to turn and prices start to go up, foreclosures due to properties being underwater will quickly dry up. Banks and property owners will wait until values increase to the point of conformance.

    Reply
  3. Julie Gray-Roller
    Julie Gray-Roller says:

    You’ve pointed out the one consistent point in industry progostications and that there isn’t ONE clear indicator on the how the market will perform this year.

    Reply

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  1. […] Article Source Filed Under: Real Estate News Tagged With: 2012, Des Moines, Johnston Iowa, Real Estate, Real Estate Prices […]

  2. […] unanswered questions, all of the experts agree that this is a great time to invest in real estate.  read article Tweet this page Share on StumbleUpon Share on Reddit Share on Digg Share on Delicious Share in […]

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