Wrapping Up 2012

Happy Friday. It’s the shortest day of the year, and the world did not end after all. At the beginning of the year I made a few predictions. Let’s see how I did:

Interest rates are going up: Fail! Mortgage rates actually dropped despite some evidence of inflation. What I didn’t count on is the Fed actively intervening to put and keep rates near record lows.

No 50 State Settlement: Fail! It was a harder sell than it could have been, and for a while it looked like they would only get 49 states on board.

Prices Going Up: Success! Every single index has shown gains this year.

Inventory will bottom,  maybe around 8000 units or so locally: Fail! Nope, they finally bottomed just under 5000 units, rebounded to about 5400, and even today we only have 5076 available. The after-holiday spike I anticipated never happened, and things went downhill from there.

Foreclosures will pick back up: In Progress! It’s slower than I thought it would be. My sources who are connected to that side of the industry say that more REO (foreclosure) inventory will come on the market late in the first quarter of 2013. Some banks have a “wait and see” attitude regarding state law. In addition, the foreclosure fraud settlement encouraged banks to do almost anything but foreclose: mortgage modifications, short sales, short refinancings, etc.. In the end, the only way into the light for housing does include both banks and homeowners admitting that it’s going to be a long time before homes have the same market value they did in the bubble.

Year of the Short Sale: Success! A year ago we had 5227 available short sales — today we don’t have that many total availables – 8361 short sales under contract and over a thousand shorts closed in the last month. Oh, and we were glad things had improved that much. Today we have under a thousand available short sales (!), over 10,000 under contract, and almost 1400 closed in the last month. Those  people and agents under contract are right now holding their breath and thinking their happiest thoughts/prayers/wishes about closing before the end of the year, when tax law changes. Those coming changes, rules making banks consider short sales faster, and incentives in the foreclosure fraud settlement combined to make this happen.

When you consider that many of my colleagues were predicting an onslaught of judicial foreclosures and prices dropping another 10%, I suppose I didn’t do too badly. The take away lesson is to keep an eye out for what is happening now, and be wary of anybody’s predictions for the future. After all, there’s a lot of people who thought the world was ending today.

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