What I Predicted 3 Years Ago

I’m not sure where folks got the idea that Realtors had a “Secret Crystal Ball” in their back pockets, but throughout the housing crisis these past (7) years, clients as well as friends, would ask me this question. “When do you think this housing crisis will end?” I would always tell them “towards the end of 2012.”

 March 28, 2012 an article appeared at www.DNNews.com The Headline stated:

Housing Crisis to End in 2012 as Banks Loosen Credit Standards!

The article went on to report the following:

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”

In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generate actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

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Even Warren Buffet says “Buy Now!”

Now…..I suppose you’re wondering where I got that “Secret Crystal Ball.” Well, I got it from a Realtor (20) years ago when he told me prices in real estate usually went in (7) year cycles. Sure enough, I counted backwards and saw he was right on! I was amazed. When the real estate market “peaked” at the end of 2005, I felt the end of 2012 would be the year prices would start to creep upwards again…..providing that (7) year cycle held its course. And guess what…… the news today is predicting that’s exactly what will happen!

How can I improve my home buying experience?

What are your thoughts?  Let us know.

IMPORTANT: If you or someone you know is interested in buying or selling a home in the Palm Desert Area, try searching properties on the same Desert Area MLS Realtor’s use, or give me a call….or visit my website at Palm Springs Homes and Estates. I will be happy to give you or your referral my “red carpet service.” After the sale, I will send you a $50 Gift Certificatetowards dinner in a fabulous Palm Springs Area Restaurant so you can celebrate!

Brought to You By Your Favorite Realtor,

Nancy Hankin