Five issues for housing in 2012
The Wall
Street Journal
Just as in 2011, in
2012 many will be trying to figure out where housing is headed. While the
housing market didn’t worsen in 2011, it also didn’t stabilize either.
This year, the story will be about local markets. While many housing
markets rose and fell together, they’re recovering at difference paces so
talking about housing on a national level is not beneficial.
Making sense of the
story
- Confidence and jobs: Housing
is more affordable than it has been in decades, but many would-be buyers
are worried about buying today if prices are going to be lower
tomorrow. Still, others don’t want to buy a house until they have
more evidence that they’re not going to get laid off or see their hours
cut back.
- Foreclosures: Banks and
other mortgage investors own around 440,000 foreclosed properties, but
there’s another 3.4 million loans in foreclosure or serious delinquency,
according to estimates by Barclays Capital. Because banks are faster
to cut prices to unload inventory than are traditional sellers, home
values can fall further as the share of distressed sales rises.
- Rents: If low mortgage rates
aren’t enough to give urgency to would-be buyers, rent hikes could
accelerate buyers’ decisions to take the plunge.
- Mortgage credit and rates:
It’s still hard for many buyers to get approved for a mortgage because
banks are demanding lots of documentation of borrowers’ incomes.
- Regulation: Many analysts don’t expect
Congress to make major changes to Fannie Mae and Freddie Mac during the
election year, but several major regulatory changes could significantly
reshape the future of the lending landscape in 2012.
- Meanwhile, the regulator that oversees Fannie
and Freddie is revamping the way that mortgage companies are paid for
collecting loan payments. This could lead to a broader shakeup in
the mortgage industry that ultimately influences how much borrowers are
charged for mortgages and how banks handle loans that fall into
delinquency.
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