The year is nearly over, the holidays are in full swing, and reflection and resolution are top of mind. As we look back at the past year, it’s clear that in many ways 2011 was a time of transition and renewal for the residential real estate market. While recovery has been slow, the Seattle housing market has finally turned a corner, albeit a soft one with some bumps along the way. In general, sales are up, which means houses are selling, yet foreclosures and short sales continue to cause downward pressure on prices.
In 2012 we will likely see foreclosures rise, but not for the reasons you might think. Banks are beginning to focus more heavily on the backlog of foreclosures and are therefore expected to take on a higher volume of filings in the coming months. As they work through this backlog, it will appear on the surface that foreclosures are on the rise, when in reality, mortgage defaults are actually on the decline. In other words, foreclosures will continue to be prevalent in 2012, but they probably shouldn't be looked at as an indicator of the overall health of the housing market.
Amidst the ups and downs of the real estate market, one thing that kept our spirits up in 2011 was historically low interest rates. Low interest rates have the power to make homes more affordable, mortgage payments cheaper, and loan terms shorter. And because of this, home buyers and owners alike saw stellar opportunities to lower their payments or refinance during the past year. Interest rates are expected to remain low in the coming months, so as we head into 2012, there’s still time to do the math to see if it makes sense to act.
There are a lot of opinions out there about what the housing market will do in 2012, but in the absence of a crystal ball, it’s impossible to know exactly how it will fare. What we do know is that it feels like real estate is returning to its roots – where buying a home is less about red hot deals and more about long-term benefits. We’re encouraged by this shift and hope to see more of it as we usher out the old and ring in the new with a sense of reverence and optimism for what’s to come in the New Year.
From our family to yours, wishing you all things merry and bright this holiday season.