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Real Estate Trends For 2012

Even with some of the pundits and experts predicting prophecies of doom and gloom for 2012 there is definitely some cause for optimism when analyzing the Residential Real Estate Market. These have been trying times and home values have dipped to their collective lowest in ages. These things are in fact, always cyclical in nature. Whether you are intending to ride out the storm or be an aggressive investor this year we have the crystal ball warmed up and ready to reveal some insights for you. We are only one month into 2012 and so far some of the following predictions have already come true. What else will we be right about? Let's find out!

Residential Market Predictions

The Economy Is The Key

The single biggest topic facing the industry in 2012 is the same as it has been the last few years: the health of the national economy. As the markets battle to claw their way out of the abyss that has been the last few years experts say to expect continued volatility with a slight return guesstimated at 10%. Between the fragile European markets and political discord on Capitol Hill, gains will still be modest. As illustrated by a recent report by The Urban Land Institute the link between Unemployment Rates, New and Existing Home Sales are always a good predictor of future growth. One indicator to keep an eye on is the GDP. Experts say it likely won't approach the vaunted 3.0 mark, but anything in the 2.5 - 2.8 range must be considered the start of a comeback.

Buy, Buy, Buy:

With home values down considerably across the board (although slightly better than terrible 2010) conditions will continue to be favor the savvy investor and homeowners with good equity. Coupled with The Fed's desire to keep interest rates low, this makes for a lot of opportunities in the stream. Even though Existing Homes Sales were down for 2011, the modest uptick in gains in Q4 could signal the start of a recovery in this area. On the other hand there is uncertainty with Fannie Mae, Freddie Mac and The FHA's long range fiscal health and ability to dole out loans and re-fi's. So it is not exactly a time where purse strings are loose either. Ben Bernanke just signaled this to be a key priority to the recovery effort in his opinion.

Investor Confidence Is Shaken But Improving

The most notoriously fickle of investors, Hedge Fund Managers have show evidence of increased attentionto home building and other residential interests of late. This is positive news for investors and gives credence to the end of year uptick in home sales regionally. Where investors are putting their money often speaks to a confidence in the sector, however slim. Hopefully this is a case where so goes the street, main street follows later on.

Buy If You Can, Rent If You Must

An outgrowth of both the slow to return of the economy and the wealth of Foreclosures and REO's 2012 may be a renters dream in terms of wealth of choice across all price levels. A shift seems to be on from those who formerly owned and were over their heads to renters. Perhaps some would be first time buyers on the fence are still too spooked by volatility to move forward to purchase. Investors who fail to flip their homes may become reluctant landlords in addition to HUD and FHA properties that may have low ticket market value may bring in something more to the table as rental properties than sales.

New Home Construction Grows Again

Even thought this seems to be the one area that would figure not to improve, there have been signs of life here too. The last four years have been dreadful across the board for new home construction. Indications late last year showed a consistent uptick in construction towards the typically slow end of the year. According to a report by, a survey of 525 home-builders by the Professional Homebuilders Survey four out of ten respondents said they expected to increase revenue in 2012. Not too mention all of the new condo construction growth in major metro areas that is gaining steam. Sentiment within the industry is picking up with a mindset built on rebounding in 2012.

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