East Bay Real Estate: 2012 Real Estate Predictions

My predictions for 2012 are now ready for your review.  And we will review how my predictions for 2011 turned out now that we are able to be ‘Monday morning quarterbacks’.   Last year’s predictions were;  #1 – Jobs = Unemployment;   #2 – Bank Foreclosure Delays;  #3 – Our Federal Government;  #4 – Interest Rates and Mortgage Loan Criteria.  So, how did I do on my 2011 predictions?

2011 Results: Unemployment has taken a turn for the better.   We are not out of the woods yet, however the unemployment rate is going in the correct direction – down;  Bank foreclosures were delayed last year, however not as much as predicted.  Short Sales increased in 2011 and Bank Owned REO sales decreased;  The Fed’s continued as a dysfunctional aspect of our economy in 2011, both from a legislative standpoint and from just not having many options to stimulate the economy;  We were completely wrong on the interest rate prediction of being in the 6% by the end of the year.  Mortgage interest rates ended the year even lower than when the year started – 4%!

2012 Predictions: #1 – Consumer Confidence;  #2 – Distressed Sales Continue – 20% of the market;  #3 – Rents continue to increase;  #4 – Foreign investors will make up 25% of home purchases.  These are some of the factors that we will be watching through 2015.

Consumer Confidence: In spite of all the conditions in place to motivate Buyers to take action, consumer confidence will stand in the way of Buyers – end of the housing crash and record low interest rates.  And, even with interest rates today being 3.85%  Buyers are still considering renting instead of buying because of FEAR = False Evidence Appearing Real. There has been so much wealth lost by U.S. consumers in the past four years that they still don’t believe we have hit bottom.  We are in a slow and deliberate recovery in the Bay Area with the tech sector leading the way and home prices will start to rise – 2%.  Home prices are hovering around the 2003 levels.  With current prices and record low interest rates,  home Buyers should be taking action now.

Distressed Sales: Our East Bay corridor will have around 20% of home sales be from Short Sales and REO’s.  The banks created a moratorium on foreclosures that last few months of 2011.  The moratorium is now lifted and we will see Short Sales increasing and REO’s decreasing with a continued impact on families. The era of banks allowing homeowners to stay in their homes without paying the mortgage is over.  However, banks are improving the Short Sale process and even helping homeowners to stay in their homes.

Rental Markets Increase: The rental market will continue to thrive in 2012.  With people exiting distressed properties and potential Buyers deciding to postpone a home purchase, it is a perfect storm for those who own rental properties to get premium rents.  In past markets a landlord could expect rents of $1.25 per square foot.  Today landlords are getting rents in the $1.40 to $1.50 per square foot.  Investors are still securing homes to add to their pool of rental properties.  Often times investors are direct competitors of home Buyers and they are generally all cash buyers so they have the advantage when presenting a home purchase offer.

Foreign Investors – 20% of the Market: In the Bay Area the #1 foreign buyer is from China.  The next group of foreign buyers is from India and the Middle East.  Russians buyers are also in the mix of Bay Area homes.  The main reason for the large number of foreign buyer purchases is the motivation to get money out of their countries and place it in safe investments – Bay Area real estate being one of the best.

So, in order to speeding up our National economic recovery the following will be required;  Create more jobs; Refinance underwater loans;  Have the banks create sound, reasonable mortgage lending standards;  Have accurate home appraisals;   and, Improve the foreclosure and Short Sale process.

NOTE: Here are the home sales results for the San Ramon Valley in 2011 – 1,974 home sales compared to 1,963 sales in 2010 – Alamo, Danville, Blackhawk and San Ramon.  There was a decrease in sales prices of about 4% in 2011 compared to 2010 prices.  The “HOT” market is still the homes priced between $700,000 and $900,000.  In this price point there were a total of 527 sales in 2011.  This represented 27% of all home sales in the San Ramon Valley; Alamo 29 sales; Danville 238 sales,  Blackhawk 24 sales; and San Ramon had 236 sales.

The $1 million+ market in the San Ramon Valley represented 16% of sales and it continues to be where price stability has been the challenge.  We expect 2012 to be the year where prices finally stabilize in most of the San Ramon Valley, remembering that all markets are micro-local.  Million dollar+ sales results;  Alamo – 91; Danville – 120; Blackhawk – 51; and San Ramon – 60.

The message is, buy now if you are going to purchase a home in 2012.  CONTACT ME TODAY for more information about selling or buying a home in the Bay Area.  Until next time…Jim Walberg

Related posts:

1. East Bay Real Estate: Jim Walberg’s 2011 Real Estate Predictions!
2. East Bay Real Estate: 2012 First Quarter Trending UP!
3. East Bay Real Estate: Some Housing Recovery Solutions!

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Filed Under: Blog, Buyers, Featured Posts, News, Real Estate, Sellers

Tagged: 2011 Bay Area Home Sales Results, 2011 Predication Real Estate, 2012 Predictions Real Estate, Bay Area Rental Market, Consumer Confidence, Distressed Home Sales, Foreign Investors Real Estate, Jim Walberg, the bay area team