Stabilizing Predicted in 2012

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Mortgage and Lending with Guaranteed Rate NMLS# 2611 173124

Home prices this year stopped their decline and gain momentum across all markets as more and more individual markets stabilize.

Though national prices will be level, the majority of markets are estimated to stabilize in 2012. Clear Capital recently reported a 2.1 percent year-over-year decrease in 2011 that was reinforced by a leveling of prices in the latter half of the year and decreasing REO saturation.

2011 was reported as a comparatively unobtrusive year for home prices compared to the last five years, national prices were down a little more than the past year and sitting at their bottommost point since 2001.

markets reacting to their limited economic drivers show a wide range of performance levels, the national numbers suggest markets are flat, but when looking at individual metro markets it turns out only 24 percent of them showed signs of stabilization in 2011, while the others are still moving more dramatically higher or lower. Lower segments of rising markets are driving much of the current price growth.

Prices weakened in December on a quarter-over-quarter basis, showing the markets giving back some of the gains of the summer buying season. The most recent six months of the year saw national home prices flat.

While national numbers for December fell somewhat, half of the major markets covered saw quarterly gains. In addition to the relatively flat home price performance, saturation rates at the end of 2011 reached a new yearly low at 24.8 percent. REO saturation was volatile early in 2011, and showed consistent declines and stability toward the latter half of the year.

2012 is likely to play out much like the last half of 2011, with a very subtle price change. A minimal decline in the beginning of the year is expected to turn into a slight gain by year’s end. Half of the 50 major metro markets are expected to post gains for the year, and individual metros will experience the full range of price movement, from double-digit growth to double-digit drops.

The prediction for 2012 shows home prices starting with a dip in the first quarter, improving in the spring and summer buying season, and continuing to climb to 0.2 percent overall progress for 2012.

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Eric Harlington

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