Top 10 Reasons to be Optimistic About Real Estate in 2012

Top Reasons To Be Optimistic About Real Estate Market In 2012

Posted on 16. Jan, 2012 by Aaron Bosshardt in Real Estate

 

As we close the books on 2011, we can say it was better year than 2010 for activity in real estate. Prices continued to drift lower for us, primarily brought down by distressed sales. Every agent I have has positive feelings about the year 2012. What’s even more shocking is that bank executives I have been talking to are positive for the first time since 2008. If you are a looking to perfectly time a long-term purchase of real estate, then this might well be the year to do it. Let’s get right to the nuts and bolts of why I believe 2012 is going to be remembered as a great year to buy real estate.
Top 10 reasons why you should be optimistic about the real estate market in 2012.

1. According to Case Shiller in 2012, 372 of the 384 real estate markets they track are projected to have housing prices appreciate, while only 12 markets are expected to see prices decline.
2. In markets that have had the largest price drops, those markets now have the most significant increases in affordability. For us in Florida, Miami is most notable where the ratio of mortgage payment to family income has dropped from its height of 59% in 2007 to 19% today. That means people are paying 1/3 of what they did just four years ago to own their homes.
3. Apartment move outs to buy homes are escalating. Currently, measured at a six-quarter high of 13.5% by Zelman and Associates. That means that 13 out of every 100 renters moving out of apartments are doing so to buy a new home.
4. Low prices combined with historically low interest rates make 2012 a once-in-a-generation opportunity to buy real estate and build wealth. Look for this trend to continue only through 2012.
5. Wall Street wants in! That’s right. Hedge fund managers are trying to figure out how to capitalize on the opportunities in the single family home market. There is some irony here. Wall Street is trying to occupy us. You should know that they are going to do it, charge some fees, and then ask your fund manager to buy in with your money. Why not cut out at least two middlemen?
6. This month’s headline from Credit Suisse monthly survey of real estate agents is a telling sign of things to come. “Affordability Slowly Pulls Wary Buyers back!”
7. 2012 is when CNBC’s Jim Kramer originally forecasted the housing crisis to end. I know he has revised this but the two things you need to remember are that Wall Street generally worries more about new home starts and builder stocks then the existing housing market. Then just remember what your old SAT test prep instructor preached, “Always stick with your first answer!”
8. According to local mortgage guru Mike Jones at Alarion Mortgage, “Rates look to continue to decline as the fed works to reduce rate in the commercial backed securities(CMBS) market as part of QE3.” Can rates drop below 4%? It’s possible. While I’m not qualified to say there is a bubble that is going to burst, it sure looks like irrational behavior is driving long-term rates that low. That’s behavior that real estate buyers should capitalize on with long-term fixed rates.
9. Job Growth looks strong as retailers and small business entrepreneurs now lean from the recession look to take on new locations and bring new jobs into our communities.
10. Of course ultimately you have heard it over and over that real estate markets are local. So for us in Gainesville, FL, 2012 forecasts look good!

Home prices: Your local forecast 384 markets tracked

Median home prices are expected to fall another 3.6% by the end of June, 2012. See how your market is expected to fare.

Gainesville, FL Metropolitan Statistical Area
Forecast Change: 2nd Quarter, 2011 – 2nd Quarter, 2012 = -5.6%
Forecast Change: 2nd Quarter, 2012 – 2nd Quarter, 2013 = +1.9%

Market Fundamentals
Median Family Income (2010) = $53,100
Median Home Price (2nd Quarter 2011) = $155,000
Change in Home Prices: 2nd Quarter, 2010 – 2nd Quarter, 2011 = -10.5%
Worst 1-Year Home Price Change (From 1980-2011) = 1st Quarter, 2007  (-12.3%)

Forecasts as of October, 2011, courtesy of Fiserv

2012 Rental Market trends

Posted on 04. Jan, 2012 by Marc Courtenay in Real Estate

The year 2011 will go down in history as the year when the rental housing and multifamily apartment rental markets began to tip in favor of owners and landlords. In many areas in the U.S. like Los Angeles, Dallas, Phoenix, Chicago and Miami, the vacancy rates lowered compared to 2010. Other areas like Cleveland, Ohio, Denver, Colorado, Houston, Texas, Atlanta, Georgia as well as the San Francisco-Oakland Bay Areas of California saw vacancy rates flatten out or improve somewhat during 2011, according to the National Association of Realtors (NAR).

The 2012 Forecast for Multifamily Rental Markets

The apartment rental market (aka multifamily rental housing) is expected to see vacancy rates drop from a nationwide average of 5.0 percent in the fourth quarter of 2011 to 4.3 percent in the fourth quarter of 2012, again according to the NAR. Multifamily vacancy rates below 5 percent generally are considered a landlord’s market with demand-supply factors usually leading to higher rents and higher capitalization rates for owners.

Areas in the U.S. with the lowest multifamily vacancy rates currently are Minneapolis, Minnesota, 2.4 percent; New York City, 2.7 percent; and Portland, Oregon, at 2.8 percent. According to the NAR, the average apartment rent was projected to rise 2.5 percent by the end of 2011 and another 3.5 percent in 2012. That’s an amazing 40% increase year-over-year! Multifamily net absorption is likely to be around 238,400 units all tolled for 2011 and 126,600 in 2012. The number apparently drops in 2012 because of a considerable reduction in supply. The true measure of change in total demand is net absorption. Gross absorption is often an inappropriate and potentially misleading indicator in terms of understanding and evaluating changes in total demand for rental units.

How Rental Housing is Being Advertised and Vacancies Filled

2012 will see the expansion of rental housing being advertised online or via sites that correlate to the explosive growth in the usage of Smart Phones and tablets such as the Apple’s iPad. The following video is a reminder of how many property managers around the nation are choosing to advertise vacant rentals using the worldwide web and why (click here). Property managers are also finding that social networking sites, like Facebook and Twitter, can be another great channel to market vacancies. Specialty websites like RentVine.com have been used by an increasing number of owners and property managers to expand their advertising of vacancies online. That trend should continue and grow in 2012.
The number of houses going into foreclosure increased exponentially in 2011. As a result, the number of displaced former homeowners looking for rentals increased to record levels. The good news is that the year 2012 looks very bright and promising for the property management industry and for both single and multifamily rental housing owners.