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Buying or Selling Your Home? Real Estate Price Predictions

Written by Steve Cook on February 16, 2012 in Real Estate  |   3 comments

Are you thinking about buying a home or selling a home this year? The experts might be able to help you anticipate what home market prices will be in the next spring and summer. However, unfortunately, a lot of those same experts have been very…

Are you thinking about buying a home or selling a home this year? The experts might be able to help you anticipate what home market prices will be in the next spring and summer. However, unfortunately, a lot of those same experts have been very wrong in recent years, and in 2012 few are going out on a limb. This year, no one is predicting much drama—there are no big government programs like the tax credit that was offered previously, but there are no busts either.

The general consensus among real estate experts is that prices, which fell about 4 percent last year, will continue to slide a point or two either by the middle or the end of the year and then begin to slowly rise. Demand won’t pick up right away, since homebuyers tend to wait until after the bottom has passed to buy and they miss out on the best deals.

Some four to six million foreclosures are in the processing pipeline (which is about the number of total homes sold each year), providing a good choice of discounted properties for those looking for a bargain in the near future. Mortgage interest rates will continue to stay at or near historic lows, making this a great year to take out a new mortgage or refinance an existing one.

Many forecasters are talking about “stabilization,” the real estate buzzword du jour. It means that the wide swings in prices that have characterized the real estate market in the past few years will settle down to less than 2 percent or 3 percent price changes a year as supply and demand come into balance. Stabilization may not sound like a good thing to a homeowner hoping to regain equity lost over the past six years, but it is a necessary step down the path that will return home values to a modest annual 3 percent to 6 percent appreciation.

Don’t look for long, sustained price increases this year. Poor prices have discouraged many owners from putting their homes on the market. Many homeowners have been frozen in place because they owe more on their homes than the homes are worth. Even modest price increases of 4 percent or 5 percent will encourage people to list their homes, adding to inventory. Most will be moving up and will buy another home and add to demand, though possibly not in the same market. This “pending supply” will have a depressive effect on prices.

Housing forecasters have learned to hedge their predictions in light of their records in recent years, so take what you read with a grain of salt. All bets are off if the economy suffers another shock, if demand falls off the cliff due to deterioration of the employment picture, if supplies of foreclosures rise again, or if a European debt crisis drives up mortgage rates.

Steve Cook is Executive Vice President of Reecon Advisors and covers government and industry news for the Reecon Advisory Report.

During his 30 year career in public relations and journalism, Cook has been a print and broadcast news correspondent, served two Members of Congress as press secretary, was a senior executive in the world’s largest independent public relations firm in Washington and Chicago and was vice president of public affairs for the National Association of Realtors from 1999 to 2007.At NAR, Cook supervised external communications including news and editorial coverage, video production, speech writing and communications strategic planning. He helped to manage NAR’s multimillion dollar network advertising program.

Cook is a member of the National Press Club, the Public Relations Society of America and the National Association of Real Estate Editors, where he served as second vice president. Twice he has been named one of the 100 most influential people in real estate. He is a graduate of the University of Chicago, where he was editor of the student newspaper. In addition to serving as managing editor of the Report, Cook provides public relations consulting services to real estate and financial services companies, and trade associations, including some of the leading companies in online residential real estate.

3 comments

  1. Caroline Lubers says:

    Hello, I would also like to draw your attention to the publication of ” 2015 – The big fall of Western real estate” anticipating the major trends affecting the real estate market now. As we arrived at a historical turning point, this book is a real tool for support on decision making, to know the trends and especially to know when to sell, when to invest or if it is better to rent … http://www.anticipolis.eu/en_index.php

  2. Marianasliving says:

    Actually, it’s hard to decide whether to sell or rent your home. This is informative blog post. Thanks for sharing them. http://www.marianasliving.com

  3. Sackville real estate says:

    Buying a home is more easy now because of prices are fell down and it is good news for the buyers to purchase a home, but for sellers it become more hard thing to sell a house with low cost. And it cannot be predict that what will be in near future, but now it is not a good news for the sellers while for buyers it is like a golden opportunity to buy a home.

    http://www.soldbyjen.ca/


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