Predicting trends during the most volatile housing market in American real estate history is no easy task.
Let's break this down and see where we stand.
1.Â Wellesley and most of the western suburbs missed the worst of the housing bubble.
2.Â Certainly prices in places like Wellesley, Needham and Brookline have skated through the worst of the downturn, even if sales are down.
3.Â The Boston Globe reports that the 128 beltway is kicking into high gear - with the amount of vacant office space having dropped to 13 percent in Waltham, the highway's bellwether market.
4.Â Biotech and high-tech firms are hiring again, with Cambridge turning into a hub of construction activity as new research palaces take shape.
5.Â If the jobless rate has anything to do with it, then yes, 2012 could be very interesting when it comes to home prices, especially in the western suburbs.
Now let's look at the trends I expect to see in 2012:
1.Â Buyers will return.Â In 2011, a lack of consumer confidence in the overall economy dramatically impacted the housing market. Buyers were afraid to make a purchasing decision on any big ticket item. By the end of 2011, consumer confidence began to return and sales increased. Economic conditions will continue to improve throughout 2012 and consumer sentiment will solidify.
2.Â Foreclosures will increase.Â The â€˜shadow inventoryâ€™ of foreclosures which has been growing since the robo-signing challenges of late 2010 will finally be introduced to the market. Distressed properties sell at discounted prices. They will impact the housing values of the non-distressed homes in the area.
3.Â Prices will soften.Â
As more and more foreclosures come to market, there will be greater downward pressure on the values of houses in the region. Foreclosures impact values of non-distressed properties in two ways:
4.Â Short Sales will increase.Â As mentioned above, I strongly believe that home prices will soften through at least the first half of 2012. Falling prices will force more homeowners into a position of negative equity. Negative equity is one of the triggers that cause people to strategically default on their mortgage obligations. If this happens, there could be an increase in the number of foreclosures. However, I predict that banks will take preventative measures which will help many of these homes avoid foreclosure by easing the requirements in the short sale process for both homeowners and real estate professionals.
With thriving high-tech and knowledge sectors priming the economic pump and ready to chase away the housing market blues in our lucky markets, economic conditions will continue to improve throughout 2012 and consumer sentiment will solidify. Once that happens, home buyers will realize that now is the time to buy.
Call me if you want help with your home purchase. We have a team, Christine Norcross & Partners, at William Raveis and we can help you find your dream home in theÂ Wellesley Real Estate marketÂ â€“ Natick, Newton, Needham, Wellesley, Wayland, Weston and more.