Experts tend to agree that 2012 will see home prices rising slightly.
Coming from Fiserv, a firm that accurately predicted that 2011 home values would drop, there’s a good chance that this prediction isn’t too far off the mark.
On the other hand, some predictions slate 2012 to be just like this past year, with home prices declining by as much as 7%. This is most likely due to the staggering six million homes in delinquency stages, which could mean massive foreclosures in the New Year.
Even though mortgage rates will continue to be low, there simply won’t be enough qualified buyers in 2012 to make much of a dent in the excess inventory.
Mortgage rates themselves will stay low at around 4%. The Federal Reserve will even continue purchasing securities to keep these mortgage rates low, so it is the perfect time to buy for those that qualify.
The problem is that countless people who have lost their homes to foreclosure or who have taken hits to their credit will not qualify for mortgages. This means that renting will be the major option.
Although banks once dragged their feet with foreclosing on homes due to the staggering amounts of homes going into delinquency, the rate at which they foreclose is likely to increase in 2012. This is good news for the rental market but will do nothing for the housing market.
Still, 2012 should finally bring about a slowdown in an economy that has been spiraling out of control. There are high hopes that this will finally be the year that everything will begin to stabilize.
But this does mean that excessive housing inventories and low levels of sales will stay the same. In fact, some experts predict that the mortgage originations in 2012 will drop to the lowest levels the nation has seen since 1997.
According to Freddie Mac, around 4.8 million homes are expected to be purchased in the year 2012, which may sound like a big number but is actually much less than normal.
A healthy housing market is considered such when only six months’ worth of housing inventory is on the market. As of right now, there exists more than an entire year’s worth of homes on the market and those houses aren’t selling fast enough.
The one thing that may help the market in 2012 is, of course, the continued low mortgage rates. We may not see 2011’s low rate of 4.2% carry on throughout 2012, but there’s little chance that those rates will exceed 5%.
Potential homebuyers could enjoy vast opportunities in 2012. With so little competition, cheap home prices, and rock-bottom mortgage rates, this will be the time to act.
Those that have endured financial devastation, job loss, foreclosures, bankruptcies and the like will just have to sit tight.
Obtaining a mortgage in 2012 will mean having better credit and meeting stricter qualifications. This will be the year to get those credit scores polished and build up those savings accounts.
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