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2012 Real Estate Predictions
December 1, 2011
Where are all the REOs…when will the banks finally start releasing all of their millions of homes from their ‘Shadow Inventory’?
Simple answer, NOW.
Consider these facts:
- The average loan in foreclosure has now been delinquent a record 631 days.
- Bank repossessions surged in October, up 48 percent in New Jersey and up 73 percent in Indiana month-to-month.
- A record-high inventory of foreclosures in process, overall foreclosure inventory is at an all-time high, 4.29 percent of all active loans, according to LPS.
- New foreclosures are still outnumbering foreclosure sales by over 3:1.
- Repeat foreclosures from ineffective loan modifications made up nearly 45 percent of new foreclosures in October. Of the 2.1 million modifications since the start of 2008 more than 10 percent were in foreclosure with another 27.4 percent delinquent 30 or more days, as of the end of the third quarter of this year, according to the Office of the Comptroller of the Currency.
- The Mortgage Debt Forgiveness Act is set to expire at the end of 2012. This will cause MORE owners to strategically default in 2012 to avoid the potential tax liability.
Buyer traffic is increasing. Home sales are up while condo sales are down slightly. Buyers realizing that interest rates cannt stay this low forever and senseing that the bottom may be near are entering the market at an increased rate.
Short sale approvals on the rise. Banks are approving these sales at a faster rate. In addition, they are negotiating some great deals with qualified buyers. This trend will continue as banks want the inventory off their books.
Foreclosures have increased by 100% in the last 30 days. The foreclosure moratorium no longer exists in SC therefore the number of foreclosures coming to the market is enormous. Our banking relationships tell us this will continue for the next year.
Pricing is expected to continue to decline through 2012. Leading investment and financial institutions are expecting prices nationwide to drop another 5-7% over the next 12 months. However, price declines will not be across the board but will be neighborhood or market specific. The expected influx of new foreclosures will drive prices down in those areas more severrely impaced by distressed properties. Communities with little or no distressed properties can expect prices to flatten or rebound by 1 to 2%.
If you are planning to purchase a home or investment property in the near future you should begin preparations now. Get your finances in order. Get pre-approved if you need financing. The best deals will go fast to qualified buyers. Buyers who cannot quickly provide proof of funding will lose out to those who can.
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