I love my job. I get e-mails from so many sources; most I never asked to get their info but I digress. What is so awesome, if it wasn’t so sad, that expert A will say one thing and expert B will say something completely opposite.
Will 2012 be the big year, the turning of the corner? Are we well on our way to recovery? Will the housing market bounce back and the economy grow stronger? Or will 2012 be more of the same? Maybe there will be a leveling off? Or maybe there is a third option; will we start a new plunge? Will we hit a triple dip recession?
What do I see happening in 2012?
WAG 1 – Economy
This is one area that I think is most confusing at the moment. The newspapers are, well not giddy, then they are optimistic. There are a couple of facts.
1. The unemployment rate has dropped
2. New jobs were created
3. New jobless claims dropped
4. The Christmas buying season was strong
I agree, all of these are good signs. However my read is a little more circumspect. Seasonal hiring accounts for some, but not all of the job gains – that is good. But by no means is this rock solid evidence of improvement. I am interested in seeing what the January and February numbers are before we can say what direction America is truly heading. As January rolls around people who could no longer claim benefits (because of time limits) can re-apply. This will be a key to watch in understanding our recovery.
A second unknown is the upcoming election. How this will affect things is not clear. We will have to wait to see.
Outside of our borders also presents challenges to our recovery. What will happen to the markets of Europe and China. Greece was just the first to falter; Spain, Italy and France are all in line to have severe troubles. China has done well while the rest of the world stumbled. However, we are now seeing problems brewing in their economy.
All in all predicting the economy for the next 12 months is nearly impossible but I am not hopeful for any real stability let alone an end to the recession either nationally or world wide.
WAG 2 – Housing Market
This one is more challenging to predict, if that was possible. The problem is that housing market is state, city, and even neighborhood specific. There are communities here in San Diego that are showing appreciation even in the ‘normal’ decline in December. Other communities are flat and others declining. To understand your community a real estate processional is critical.
Here is a fact, some cities will lead the way; they will be strong indicators of what is to come. The industry calls them ‘smart cities.’ They get this label based on desirability and economy. San Diego is one such city. Watch what happens in our fair city (and other smart cities) to see where the nation will head next.
WAG 3 – Sell, Buy, or Run
So how is the real estate market? Not an uncommon question for a real estate agent to be asked. The not uncommon answer is ‘depends if you are buying, investing, or selling. So, let’s look at each of them independently.
Buying – Is this a goods time to buy? The short answer is yes! With interest rates being in the 3.9% range and prices back to early 2000 levels; the time to buy is now. That is one thing most of the financial wizards agree upon – buy now.
Investing – Likewise, now is a great time to invest in property. Mainly for the same reasons; buy now and in a few years you will be very glad you did. Also another good reason is that rents are strong and going up. Invest and rent out for income now and a pay off after the markets start their normal appreciation.
Selling – This one may surprise you but yes, now could be a good time to sell – depending on why you are selling. If you want to upsize your home then now is a good time to sell and buy that bigger house. Also, getting your house on the market now you will be able to take advantage of the typical Spring increase.
Final Predictions: With all of these thoughts, what is my bottom line opinion? I might as well add my wild guesses to all the pundits. I think 2012 will be the year of the buyer. We will see more real estate activity driven by buyers. Banks will be able to unload some of their shadow inventory and clear the back log a little. Foreclosures will still happen, maybe increase slightly and short sales will still rule the market. While this activity will be good for the economy it also has a challenge as well.
I think that in most areas of the nation prices will have an overall decrease again this year but not severe and not steep. We will see some gains in the spring with offsetting declines in the fall and winter. A few cites and communities will actually see appreciation.
So, how right will I be? Check back in 12 months to see how well I did.
*Disclaimer – David Cairns is a real estate professional serving San Diego, California and is licensed by the State of California only under CA DRE lic #01890743. All information on davidcares.com is for informational purposes. Information regarding short sales, foreclosures, buying homes, selling homes or any other information is general in nature and is not intended or should be construed as legal, tax, or other advice. Every person has a unique situation; I would be happy to talk to you regarding real estate matters. You must consult a legally qualified person for advice in all other areas before taking any action. I can be contacted at firstname.lastname@example.org