What Will 2012 Bring For Southern California Real Estate?

Let's get out our crystal ball and take a look... That is about as much as anyone I have talked to knows. It is only a projection based upon trends, but really no one knows for sure. Everyone is guessing, but we can make some pretty good calculations, and estimations based on what’s actually happened and inventories. First of all, you must remember that home ownership is about a whole lot more than a cash investment. Yes, it’s a hedge against inflation (more on that below), and yes, it’s the only investment where you can leverage your cash on such a large transaction. Those points alone should make real estate attractive. But houses were never meant to be ATM’s, as many have sadly discovered, and they were not meant to be flipped as fluently as trading stocks, which still others have discovered. But for the long term buy and hold mentality, it’s hard to beat real estate. And, that philosophy was just discussed by 3 economists in the New York Times in the December 31st Business section. But home ownership is much, much, more. It is where you raise your family, it is your sanctuary, and it is a quality of life embedded in your investment. But maybe most importantly, it’s a way to protect your housing dollar from ever rising again...EVER. To find out what next year will look like? Read the whole newsletter, and you should get a pretty good idea. A summary statement might be, look for the beginnings of the turnaround, for prices to bottom out by 2nd quarter, interest rates to stay killer for at least 6 months, and the overall economy to do its part, as it’s projected to grow about 4% this year (last year was approximately 2.7%). WHERE WILL HOUSING PRICES GO THIS SPRING? There are some indicators worth noting. First of all,the slough off of foreclosures last year due to moratoriums and fraudulent robo signing issues should be off the radar and allow foreclosures to ramp back up. That should mean more competition with the short and equity seller, as well as some pent up listing activity of people who didn’t want to list during the holidays. The first and second quarter is always when you see the most listing activity. Following are 4 brief statements by various entities about spring pricing. Zillow believes we not see a bottom in prices until the first quarter of 2012. Standard and Poor thinks prices will drop 5% in the next few months. JP Morgan Chase believes prices will depreciate 6% to 7% over the next 6 months. Barclays says prices will fall 7% by the end of the first quarter of 2012. One thing everyone seems to be in agreement on: housing prices will bottom out by mid-2012 and then stay flat, bringing this down market to an end. A long recovery may be in the offing, but it will be hard for buyers to stay on the sidelines with current pricing and interest rates. Don’t be fooled by a house that MAY decline another 2%-3%, but be stuck with a higher interest rate on the loan that more than eradicates any savings on the housing price. WHAT WERE THE ACTUAL NUMBERS FOR NOVEMBER (THE LATEST MONTH AVAILABLE)? The total number of resale properties was 2,080 which broke down to 1,452 single-family and 628 condos. Looking closer at the sales, there were 974 single-family equity sales, 265 short sales, and 213 REO listings sold. All these numbers are closed sales. There were 292 equity condo sales, 187 short and 149 REO listing. (All numbers for Orange County. You may check other counties throughout the state by going to www.dataquick. com). There were a total of 1,643 Notices of Default filed, and 1,538 Notices of Trustee Sale recorded. There was a total of 535 trustee sale auctions held, with 172 being purchased by investors and 363 going back to the banks (those are the future REO or bank owned listings that will be coming out in future months).