5 Issues that will Shape the Housing Industry this Spring

by on February 15, 2012

While no one in the Real Estate industry truly has a crystal ball that does not stop us from trying to predict the outcome of real estate sales this spring and throughout the coming year. There are many factors which play a roll in housing starts and sales in the US and California in particular. The bond market, stock prices, consumer confidence, to name a few. Here are some that were recently mentioned in an article in the wall street journal which I thought were right on:

  • Confidence and jobs: Housing is more affordable than it has been in decades, but many would-be buyers are worried about buying today if prices are going to be lower tomorrow.  Still, others don’t want to buy a house until they have more evidence that they’re not going to get laid off or see their hours cut back.
  • Foreclosures: Banks and other mortgage investors own around 440,000 foreclosed properties, but there’s another 3.4 million loans in foreclosure or serious delinquency, according to estimates by Barclays Capital.  Because banks are faster to cut prices to unload inventory than are traditional sellers, home values can fall further as the share of distressed sales rises.
  • Rents: If low mortgage rates aren’t enough to give urgency to would-be buyers, rent hikes could accelerate buyers’ decisions to take the plunge.
  • Mortgage credit and rates: It’s still hard for many buyers to get approved for a mortgage because banks are demanding lots of documentation of borrowers’ incomes.
  • Regulation: Many analysts don’t expect Congress to make major changes to Fannie Mae and Freddie Mac during the election year, but several major regulatory changes could significantly reshape the future of the lending landscape in 2012.
  • Meanwhile, the regulator that oversees Fannie and Freddie is revamping the way that mortgage companies are paid for collecting loan payments.  This could lead to a broader shakeup in the mortgage industry that ultimately influences how much borrowers are charged for mortgages and how banks handle loans that fall into delinquency.

What does this mean for us here in California? It means that there is still plenty of uncertainty in the market. This definitely causes buyers to hesitate when pulling the trigger on writing an offer. There are great houses out there and fabulous loan products available but with that uncertainty, even the most seasoned potential home buyer is reluctant to act.

Home prices will probably remain stable for us here in the Bay Area, especially in the Santa Clara County area where home sales continue to soar.

If you are ready to take the plunge toward home ownership, give me a call at 408-839-2125.

Be Sociable, Share!

Previous post:

Next post: