My Real Estate Predictions for 2012

1.  Real estate sales will continue to improve.

  • Improve means more confidence, more activity and more sales.  My definition does not include increasing prices or a return to 2007 prices.
  • Still too much supply in certain price points, namely million dollar + homes, where there is still a 8-10 year supply.
  • Many sellers will finally realize that, contrary to their fantasies, prices are not going to make a sudden return to 2007 levels.  There will be more seller price capitulation in 2012. 
  • There will continue to REO, short and distress sales in 2012, with more in the high end segment.  the ability to "fake it" is running out for many people who have been hanging on for 4 years.

2.  Real estate will be seen as the "other gold".

  • Returns in money markets, CDs and bonds will remain near zero in 2012.
  • Uncertainty in world economies will heighten.
  • Many will come to U.S. real estate in rare and beautiful places as a safe haven you can use and enjoy.

3.  "NEXT" continues to be the favorite word of buyers in 2012.

  • Emotion has left the real estate market and will remain missing for at least the next year or so.
  • Buyers are conditioned to wanting a deal, otherwise known as a "steal" , to purchase ANYTHING, especially luxury real estate.
  • Buyers will continue to fall in love with the deal not the house, condominium or ranch.

4.  Second home sales will continue to do better than primary homes in 2012. 

  • Second home sales are demographically driven - Boomers.
  • Many Boomers have been out of the second home market not because they cannot afford to buy, but because it wasn't cool to buy a second home when economic conditions were dire for so many.
  • Boomers will only deny themselves of what they want for so long.  we are coming on 2 years of denial which is about the limit for most boomers.
  • See #2 above.

5.  2012 may be the last year to get the best deal.

  • It's a little different this time.  In the past, real estate cycles have been about 5 years long.  Depending upon who you ask, this downturn started in 2005 to 2007.
  • This downturn is more biblical both in terms of scope and duration.  Five to seven years is probably what we are looking at so 2012 may be the last year to get the best deal as the homes with best prices in best condition will go first.
  • This market has been picked over for 4 years and some of the very best buys have come and gone.  
  • I KNOW there are buyers that are reading this thinking they are smarter than me and will wait because they are smarter than me and will only buy at the true bottom...NOT GOING TO HAPPEN since we will only know when that is in hindsight!  It won't be a one week or a one month event.  It might be a 6-12  month event window though.