What Will The 2012 Northern Kentucky Real Estate Market Look Like?
It is that time of year when Realtors and Mortgage Loan Originators begin planning for the 2012 real estate market. We'll take time to analyze our results for this year, measure that against projections and attempt to come up with a plan for 2012.
For many 2011 is turning out much worse than 2010. The reasons are varied. We've seen many changes in the lending industry this year. It has been difficult for us to conduct business with constant changes. The biggest difference in closed loans is two fold. One is the appraisal problems. The second is increased costs to borrowers due to credit scores. I really do mean credit scores, not a question of whether one pays bills on time, but what score that person has.
When a borrower pays all their bills on time, yet has recent inquiries, or open new lines of credit, has high usage of revolving credit, he will score lower and costs to refinance or purchase a home goes up. Recently there was a change announced that will reduce the costs somewhat, but perhaps not enough to get these borrowers refinanced at the lowest possible rate.
We mortgage originators began to see failed closings due to appraisal problems increase in 2010. Increasingly this year it is reported that appraisals are wreaking havoc with pending sales.
At this point in time, I think 2012 will look a lot like 2011 as to volume.
In 2012 we are not going to see a big increase in loan products we can offer. I don't think we will see a substantial improvement in appraisal problems. We will most likely see a continuing shrinkage of products as well as sources for the consumer as more lenders leave the business. We see wholesalers announcing they are pulling out as well as there are fewer independent mortgage brokers in our market.
The biggest issue affecting housing recovery is that unemployment will continue to be a problem. As long as people are not working, they cannot buy homes. Workers who are being laid off, particularly those older workers will be hard pressed to find new work. On top of this the problems in Europe will be a long time getting settled. Add to these two things the foreclosures on the market and it is really hard to expect a vastly improving housing market.
These are the reasons I expect 2012 to not be a better year than 2011. I am hoping it will at least not decline further. Another factor is that consumers are not feeling comfortable enough about jobs to change their housing situation. Many will sit pat until they feel the worst of the storm is over. That will be a while yet.
Overall if 2012 is at least as good as 2011, it will be the best that can be expected. There is still an oversupply of homes on the market in Northern Kentucky. There will always be really good deals on a case by case basis. As always it is important to do your homework before considering a purchase or a refinance.
