This is the number one question to ask each individual buyer, seller, and real estate professional we meet in 2012. What drives residential sales is the deep down belief that now is the best time to purchase a home verses “let’s wait and see where this goes.” There is no perfect time to buy, but let’s look at some of the reasons people are buying or waiting in the year 2012.
In a recent survey by the National Association of Realtors, 33% of home buyers say that they want help understanding financing in 2012. It is no secret that financing is a huge issue today and for 2012. We could argue that financing got us where we are today, but financing could get us out. There is no question that interest rates are at an all time low, and according to some they may continue to stay low.
However, the issue remains the number of buyers who are not qualifying for “conventional” financing. In New Hampshire, during the first 11 months of the year 2011, just under 40% of home buyers used conventional financing. Compare this to the same time period in 2007 when over 75% of home buyers were using conventional. The gap in lending is being filled in The Granite State by cash (33%) and lending programs such as FHA and Rural Development (23%). This is tracking nationally with the National Association of Realtors saying that in the year 2011, 30% of all house closings were cash transactions. We forecast that lending will continue to be a leading issue in the year to come, with home buyers being creative on how to obtain long term stable debt options.
Valuation is going to be a key in 2012. Home prices have come down in some towns in Southern NH by close to $100 a foot from their all time highs in 2006 and 2007. More so there is inconsistency from town to town and even within towns as to where prices are going. Nationally the recent Case-Shiller index of 20 cities showed that prices have declined nationwide by 3.4% year over year, for the month of October. But much like the weather, real estate is local; in New Hampshire we can look at that same period and say that the total volume of homes sold is up just fewer than 3% with much of that made up by the fact that October saw a 13% spike in the number of homes sold over the previous year. We believe this trend will continue, more homes selling in 2012, with little movement in the overall value of the prices.
What about subjective reasons for buying? Ones that don’t fit into boxes? A Gallop Poll showed 67% of Americans think that now is a ‘good time’ to buy a home. Donald Trump was quoted saying: “This is a great time to buy a house.” Consumer confidence is implied to be up with Forbes reporting that holiday shopping was up 4.7% over 2010. But home sales are not created by polls or by what consumers purchase around the holidays.
Ultimately people in New Hampshire shall have to decide for themselves based upon what they are seeing in their personal situations. Our team has seen an increase in volume, closing out the fourth quarter of 2011. With the trends above noted, we see 2012 as a year of increased confidence with increase in volume of sales – And, we look forward to it!
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