Last year, my state of the industry post followed the state of... addresses by the President and heads of various states. This year it's my turn to go first, and like last year, the following are opinions that are based only on my personal perception.
The industry is almost the same as the beginning of 2011. Prices are not changing with any alarming velocity, and the number of sales, although somewhat improved in many markets, are not approaching robust levels. The new distressed properties are, like many in the beginning of 2011, no longer the result of loans to the unloanable accidental homeowners, but now the result of a poor economy and a job loss or other hardship. The fact that many persons who can't keep their homes cannot afford to sell them is perpetuating the poor state of the housing industry and a high inventory of distressed property.
As it was in the beginning of 2011, most buyers are first time buyers or investors, and they are getting what appears to be excellent value and excellent interest rates on financing. Although it appears that there is little possibility of a spike in home prices, interest rates could experience rapid substantial changes.
Last year, my opinion was that the industry needed to involve move up buyers in the market before anything turns around in a noticeable way. That opinion has not changed. With so many underwater owners immobilized for probably another decade, it's hard to see how the present course will change before the 46th or 47th President takes office. We have a half generation of people who will only move out of their homes if they walk away or negotiate a short sale with their lender.
Government initiatives are all directed at immobilizing people or turning them into renters. People who want to stay where they are are being encouraged and assisted in negotiating their exit. People who want to buy and move to a home that is a better fit for their families are stuck where they are, even if they can afford a much higher payment. Government and lenders have joined forces in virtually ignoring this large number of forgotten Americans. They can either stay or walk away and become renters. 2012 -- more of the same.