Romney, Obama, and Housing

With the Presidential election just a couple months away, lets take a quick look at what each candidates housing policies are.

Barack Obama (D) - With President Obama, we actually have a track record to look at.  Unfortunately for the President, his housing policies have done very little to fix the problems facing the market.  Through a variety of different programs (HARP, HARP II, etc..) Obama has primarily focused on helping underwater homeowners refinance in an attempt to keep them in their homes.  These various programs have had some success, but most analysts agree that they haven't done nearly enough.

Interestingly, President Obama's re-election website does not list any housing policies.  He has posted his policy positions on a variety of other issues, but housing is notably absent.  Unfortunately for the market, the President doesn't seem to have much of a vision, and if he does he isn't exactly waving it around for the public to see.

Mitt Romney (R) - Mitt Romney has not been President, so we don't have a track record to analyze.  However, his website does lay out his policy vision on housing.  You can find that information here.  The core of Romney's housing plan is to reform Fannie Mae and Freddie Mac, the two government-sponsored enterprises.  The website doesn't provide any specifics as to what constitutes "reform", so it is unclear what exactly he means.  He also mentions that he plans to roll back most or all of the new rules and reforms instituted under President Obama.  Mitt Romney certainly deserves credit for outlining and providing a housing policy, but the lack of specifics is certainly frustrating.

Conclusion:  So what does this all mean?  From a "big picture" perspective, neither candidate seems willing to address the substantive issues in the housing market.  Although the market has recovered significantly in recent years, there are certainly underlying issues that need to be tackled.  Personally, I'd like to see something from the following list implemented:

-One year moratorium on all foreclosures sales.
-Streamlining of the short sale process with basic rules set by the federal government.
-Slight loosening of underwriting standards on Freddie and Fannie loans.
-Streamlined re-financing of any underwater homeowner who is current on payments.

I could continue this list, but these are four ideas that would drastically help the market, and neither candidate is willing to go there.

At the end of the day, the pundits say this election will be about the economy but the candidates refuse to discuss one of the central tenants of the economy.  It's frustrating as a real estate agent, and it has to be even more frustrating for those that bore the brunt of the housing market.

Analyzing My 2012 Real Estate Predictions

WOW!  It's been a while since I posted here.  It's amazing how easy it is to let things like a blog go unnoticed when you are busy!  However, no excuses - I promise to update this blog on a more regular basis going forward.

I want to write a follow-up post to an article I wrote at the beginning of the year.  The purpose of the first article was to form some predictions for the real estate market in 2012.  We've been through a tumultuous few years, and I was worried that my predictions might end up wildly inaccurate.  However, I actually haven't done so bad!  Let's take a look more closely:

1.  Interest rates will remain at historic lows.

Fixed-rate 30-year mortgage rates, 1/1/12 to present

Not only have interest rate remained at historic lows, they have actually fallen over the course of this year.  With the Federal Reserve keeping their overnight interest rate at essentially 0%, mortgage rates have continued to fall, even with growing demand for mortgage purchases and refinances.  So overall, I would say that my prediction has been quite accurate!  The chart on the left depicts the interest rate on 30-year fixed mortgages, courtesy of Freddie Mac.


2.  Market inventory will continue to fall.
My prediction regarding inventory was right on the money as well.  At the beginning of the year, there were 22,793 homes for sale in the Twin Cities region.  The most recent numbers we have show that there are currently 17,461 homes on the market.   This rapid drop in inventory is pretty closely correlated with my next prediction.

3.  Prices will be flat or slightly higher.
Unlike the last two predictions, which were fairly easy to measure and analyze, this prediction is a bit more nuanced.  In some areas, we have already seen prices increase since the start of the year.  In these same areas, prices have actually been increasing for the better part of a year.  However, there are still some areas that are battling high distressed sales, which has kept prices either flat or slightly falling.  Overall, I'm going to rate this one a wash. 

4.  Foreclosure rates will fall in 2012.
This may be my most off-base prediction of the four I made.  By most measures, foreclosure rates have actualy increased in 2012.  Many analysts assign blame to banks ramping up foreclosure operations after finally settling a massive lawsuit brought by the Department of Justice.  According to Daily Finance Online, foreclosure notices are up 6% compared to the beginning of 2012.  For now, I will rate my prediction as a fail.  However, it will be interesting to watch how the foreclosure rate changes over the next few months.  The "shadow" foreclosure market has been the elephant-in-the-room for some time, and real estate professionals are watching very carefully moving forward. 

Conclusion:  At the end of the day, I didn't do too bad!  Overall, the market has continued many of the trends we've seen over the last year.  Watch back for more predictions!
  

Another Wonderful Testimonial

I received another testimonial from a great client recently:

I would highly recommend Josh to anyone I know who is looking at buying or selling a home.  I already look forward to working with him next year as I look to buy my own condo.

Do you know anyone looking for this high level of care?  Please pass my information along to them, I take great pride in the work I do and making sure it is a positive experience for my clients.

Another Testimonial...

I recently received a very nice testimonial from a client of mine:

Not knowing what I was getting into or what to expect with the short sale process, Josh was very clear in what to expect and what the timeline would be.  We also had to get over the hurdle that I was living out-of-state during the process.  Josh made the short sale easy and worry free.  Everything was handled and communicated above expectations.

I truly appreciate the kind words - my job is to make things stress-free and provide a high level of service, and it's nice to receive confirmation of that.  If you know of family or friends looking to buy, sell, or avoid foreclosure, please refer them to me.  I will take care of them with the same dedication and care that is exemplified in this testimonial.  

Josh's 2012 Real Estate Predictions

Nothing is more enjoyable than wildly speculating about what the future holds.  Of course, there is no way to predict with any certainty, but I think there are some underlying trends that will continue into 2012.  So without further ado, here are my 2012 Real Estate Predictions:

1.  Interest rates will remain at historic lows.
This one seems like a slam-dunk, of sorts.  The Federal Reserve has already pledged to keep interest rates at their current level through the end of 2012, and interest rates have fallen about one percent over the past year.  To the left is a chart that depicts Freddie Mac mortgage rates over the past 40 years.  This should provide perspective on just how low current rates are.  However, buyers should not get complacent - interest rates will not stay where they are forever.

2.  Market inventory will continue to fall.
Over the last year, we have seem a dramatic decrease in the amount of homes coming on the market.  In fact, inventory has fallen roughly 30% in just the last year.  Of course, it has fallen 30% from historically high levels and the market still has room to balance out.  My prediction is that we will continue to see the amount of inventory fall, which leads beautifully into my next prediction!

3.  Prices will be flat or slightly higher.
With declining inventory and low interest rates, it is simply a matter of time before we start to see small price increases.  I've actually been predicting price increases on this blog for the last few months, and conditions seem prime for it to happen.  Expect hesitant buyers to start pulling the trigger once news stories begin talking about prices increasing.

4.  Foreclosure rates will fall in 2012.
There are still a considerably high amount of distressed properties on the market, but I suspect the total number will be quite a bit less than in 2011.  Unemployment numbers have continually improved, and the market has already been in full-blown liquidation for the last three years.  Expect the balancing between traditional and distressed listings  to continue in the next year.

Now, let's be clear:  these are fairly innocuous and conservative predictions.  The market will continue to improve this year, just as it did last year and the year before.  We are still not out of the woods yet.  But expect a more vibrant real estate market in 2012 than we saw in 2011. 

Happy 2012 to all my blog followers, and as always, if you have any real estate questions please do not hesitate to contact me!