Your Predictions for Housing and Real Estate Investing in 2012

[Joshua Dorkin]

Hey all - I was curious about your thoughts and predictions for the real estate / housing market for 2012. What do you expect? What will things look like for investors and traditional buyers/sellers?

I'd love your feedback both regarding local markets and the big picture, national outlook.

[Ralph S.]

Underwater, resetting 5 and 7 yr ARMS originated in 2004-07 will continue to fuel the still growing foreclosure rate, not expected to peak until 2013. A new bubble is forming in the shadow inventory, which should now include homes defaulted on, that haven't been foreclosed. Sooner or later, who knows when, the rate these properties come to market will have to exceed the rate of foreclosures. It can't grow forever. By keeping these homes off the market and controlling when and where they do go on the market, they influence some control over the available supply side.
This can't continue indefinitely. Even now, the fed gov is planning ways to shed the Fannie/Freddie inventory. What happens when this is turned over, initially to large investors who then parcel it out, fueling the supply of available homes?
Today, we see declining prices, a buyers market, and our perspective is from when we were at the top of a artificial bubble and today's market sucks in comparison. In the future, when we look back at today, I think our perspective will be the same. Those days (today) will still be the good old days, before the crapola hit the fan.
Pretty gloomy. I know.
On the positive side, rental demand will continue to grow. Vacancies down, rents up. Price to Rent ratios will continue to improve. While disgruntled former owners will enter the renter population, growth in rental opportunities will be in middle class with a better class of tenant. So, if you started off in low income for the cheap price of admission, it's time to start looking at middle income blue and white collar for growth. NOO percentages are rising in middle class areas. Take advantage of it.