The real estate market has particularly received an lot of bad press over the past few years. The volume of foreclosures and short sales that flooded the market causing a downward spiral has shaken the industry. At this point, it does not really matter who or what was the cause of the “burst bubble”. There is plenty of blame to go around! In hindsight, we should have seen the disaster heading our way. The relaxed mortgage loan qualification process, the artificial inflation and the overall sense that equity in your home was something to borrow on and spend. The reasons for the real estate collapse will be debated for years. Now is the time to move forward to help restore the industry and allow homeowners to own a home again!
Here in Arizona, after years of rapid growth, we were one of the first real estate markets to tank when the real estate bubble burst. The good news is that we are also evolving into one of the first real estate markets to recover. Though the recovery is slow, it appears to be steadily improving and moving in a positive direction. This is good news for just about everyone. It is not simply realtors who were affected by the downturn. There are multiple industries that depend on real estate for their lively hood. Aside from those more directly connected to a real estate transaction such as inspectors, appraisers and title companies; there are multiple other industries that have suffered with the real estate downturn – movers/moving companies, furniture stores, small businesses, construction, manufacturing and more. In one way or anther, we were all affected by the slumping market.
So what is in store for 2012? Our local Phoenix metro area real estate inventory significantly declined in 2011. We enter 2012 with half of the volume that we started with in 2011. The foreclosure market has also been greatly reduced. The forecast is that Arizona no longer has a large potential glut of future foreclosures looming over its housing market like other states. Short sales will remain with us for the foreseeable future, but banks/lenders are committed to work more efficiently with the short sale properties. They are recognizing that the short sale minimizes the overall loss on a property. A short sale property also tends to be in better condition and sells at a higher sales price than a foreclosure. The increased sale price is positive for the eventual market recovery. Banks have vastly improved their methods/regulations and have been approving a record number of short sales.
The fear that paralyzed the real estate industry is slowly being replaced by rising optimism that real estate is a good investment again. The American dream of home ownership has never totally departed. Most of the so called real estate ‘gurus’ all are forecasting a brighter future.
Here are some of the predictions:
- ‘Arizona’s real estate market, will continue its “agonizingly slow recovery” in 2012, which is likely to be better than 2011’ said Pollack president of real estate consulting firm Elliott D. Pollack and Company.
- “Although the Arizona recovery is tepid at best, every key indicator is expected to be improved in 2012 compared to 2011, including jobs (up 1.8 percent), incomes (up 6 percent), and retail sales (up 8 percent). But no indicator will be sharply better until the national economy moves onto a faster growth path.” said Lee McPheters , director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business.
- CNN Money magazine predicts – Across the US, median home prices are expected to fall another 3.6% by the end of June, 2012.
- Michael Orr, Analyst and Author of The Cromford Report, comments “The idea that average Phoenix home prices are falling is a myth. The price bottom occurred on September 15, 2011. For three months now home prices have been on a strong and clear upward trend.”
- Local homebuilder executives and analysts agree there are reasons to expect a better year in 2012 . They said there already have been improvements in some key market fundamentals during the past few months that have given homebuilders a reason to hope.
- The National Association of Realtors (NAR) predicts that 2012 will be one of the best years on record for housing affordability.
Where is the Arizona Real Estate market headed in 2012? Overall, the market is improving. One of the most promising changes in the housing market since early 2011 has been the drastic reduction in the number of existing homes available to purchase in metro Phoenix Good homes, priced right are selling quickly and this will continue into the future. The real estate outlook for 2012 is optimistic!