Real Estate May Begin to Come to Life in 2012

By KATHLEEN LYNN MCT

Published: Thursday, January 5, 2012 at 10:48 p.m.

HACKENSACK, N.J. | The housing market — staggering under a slow economy and still paying for the excesses of the boom years — may start to stir to life in 2012.

But experts warn that a real rebound is still several years away.

"Our outlook is that things (in 2012) will be a little bit better than 2011," said Patrick Newport, an economist with IHS Global Insight. "But that's not saying much."

Blame the economy, with unemployment topping 8 percent. If economic and job growth pick up in 2012, housing is likely to get a boost. But that's a big "if." IHS expects the U.S. economy to grow at an anemic 1.6 percent — or possibly even tip into recession as a result of Europe's debt problems.

"Our view is that the economy isn't going to grow fast enough to bring down the unemployment rate," said Newport. "That's one of the reasons that it will take the housing market another 1 ½ to two years to get back on track and start growing again."

"People are not going to come out and make the most expensive purchase of their lives if there's any uncertainty about their jobs," said Robert Denk, an economist with the National Association of Home Builders, who predicts that home construction won't return to normal levels until 2015.

And the housing market is still suffering a hangover from the wild times of 2004 and 2005, when questionable mortgage practices inflated prices to unsustainable levels, and allowed unqualified buyers to get into homes they couldn't afford.

Newport expects prices nationwide to slide another 5 or 10 percent in 2012, as the foreclosure pipeline gets moving again, dumping distressed properties on the market. Foreclosed properties tend to sell at a discount of 20 to 30 percent, according to several studies.

Lower prices have left many homeowners (especially those who paid high prices at the market peak) owing more on their homes than the properties are worth.

Of course, the lower prices have also made it easier for buyers to afford homes. And once the foreclosure bottleneck is cleared, many low-priced properties will come onto the market, said Patrick O'Keefe, an economist with J.H. Cohn in Roseland, N.J.

"There will be a lot of opportunities for purchasers to get steeply discounted properties," he said. He predicted prices will stabilize by the end of 2012.

Many buyers have held back because they think that home prices will keep dropping.

"Most people don't want to buy in a market where prices are falling, because you lose your equity right off the bat," Newport said.

INTEREST RATES

Mortgage rates, which have been near record lows for several years, will remain below 5 percent, according to most forecasts. Along with lower home prices, the rock-bottom rates have made buying a home much more affordable. But many potential buyers find they can't qualify for the lowest rates unless their credit is flawless.

CONSTRUCTION

The multifamily market — especially for rentals — is the only area where construction has started to pick up again.

AvalonBay Communities Inc., a Northern Virginia-based rental company, is building new apartments in three New Jersey locations.

"People are renting for a variety of reasons, including insecurity about their jobs," said Ron Ladell, a vice president with AvalonBay. As the homeownership rate has dropped from a record 69.2 percent in 2004 to 66.3 percent in the third quarter of 2011, millions of people have turned to renting, he pointed out.

At the same time, he said, "there's a dearth of supply — for the last three or four years, there's been no building." He expects that low supply to translate into demand for AvalonBay's properties.

For the most part, new home construction has been bumping along at the lowest levels since World War II.

"We're expecting some recovery in 2012, and a little more momentum in 2013," Denk said.

Even so, in 2012, builders are expected to construct only about 40 percent of what's needed just to keep up with population growth, which Denk said is about 1.2 million units a year. In 2013, home construction will come to only 60 percent of normal levels, he predicted.

David Stiff, an economist with Fiserv, said builders are reluctant to move forward with new projects because they would have to compete with low-priced foreclosures. And banks will remain reluctant to lend to builders "until they're sure the housing market has started to stabilize," he said.

RETURN OF BUYERS

During the 2007-09 recession, about 2 million fewer new households than expected were created, according to Denk, the economist with the National Association of Home Builders. And household formation has continued to be depressed since the recession ended, Denk said.

After losing their jobs (or their homes to foreclosure), millions of people doubled up with friends or relatives. At the same time, young adults stayed in their parents' homes longer while they searched for good jobs.

But sooner or later, most of these people will create their own households, ratcheting up demand for apartments and homes.

"Kids can choose to stay in their parents' houses longer, or young adults can live with roommates longer, but at some point, something's got to give," Denk said. "To be in your 30s or 40s and still living in your parents' basement, that's just not going to work."

With the U.S. population growing by about 3 million a year, the housing market needs about 1.5 million new homes a year, Newport said. But he expects that builders won't ramp up to that level until mid-2013 or 2014.

"Ultimately, demographics will bring the housing market back to life," Newport said. "The question is when is that going to happen?"

News of Housing Industry

Ten Predictions for the Housing Market…

Ten Predictions for the Housing Market… (1219)

Administrator (News Housing Industry ) 2012-02-19 12:53:02

By Dawn Wotapka  January 20, 2012 Last year, David Goldberg, UBS’s home-builder analyst, issued 1…

Read More...

Realtors in Dalton get pep talk on economy…

Realtors in Dalton get pep talk on economy… (1357)

Administrator (News Housing Industry ) 2012-01-27 15:57:21

  by Ellis Smith DALTON, Ga. -- Few metropolitan areas suffered as much during the recession as D…

Read More...

Protesters take message to Hampton bank customers…

Protesters take message to Hampton bank customers… (1251)

Administrator (News Housing Industry ) 2012-01-20 17:20:52

Posted: Jan 20, 2012 1:19 AM EST Updated: Jan 20, 2012 1:34 AM EST By STEVEN REILLY HAMPTON…

Read More...

Housing a drag on growth…

Housing a drag on growth… (1507)

Administrator (News Housing Industry ) 2012-01-12 14:59:31

Written by DOUG WILLIAMS The News Journal Jan. 11, 2012 The economic recovery in Delaware and the…

Read More...

Corker opposes write-down of mortgage principal…

Corker opposes write-down of mortgage principal… (1296)

Administrator (News Housing Industry ) 2012-01-10 21:48:55

By Vicki Needham - 01/10/12 12:00 PM ET A Tennessee Republican is concerned that taxpayers will…

Read More...

Fed President Adds Own Suggestions to Housing White Paper…

Fed President Adds Own Suggestions to Housing White Paper… (1562)

Administrator (News Housing Industry ) 2012-01-06 15:11:57

by Jann Swanson Jan 6 2012, 12:49PM   In remarks prepared for delivery to the New Jersey Bank…

Read More...

Housing market expected to make small gains in ’12…

Housing market expected to make small gains in ’12… (1346)

Administrator (News Housing Industry ) 2012-01-06 09:13:10

By KATHLEEN LYNN The Record (Hackensack N.J.) HACKENSACK, N.J. – The housing market – staggering…

Read More...

Les Kramsky, A Highly Regarded Real Estate Attorney, Gives Predictions for 2012…

Les Kramsky, A Highly Regarded Real Estate Attorney, Gives Predictions for 2012… (1449)

Administrator (News Housing Industry ) 2011-12-31 13:15:35

MARLBORO, N.J., Jan. 5, 2012  Les R. Kramsky, Esq., the General Counsel to the Money Store, is one…

Read More...

U.S. Ocean Imports Grow 5 Percent in November…

U.S. Ocean Imports Grow 5 Percent in November… (1300)

Administrator (News Housing Industry ) 2011-12-31 13:15:35

Recovering Home Sales Market Pushes Rebound, Reports The Journal of Commerce/PIERS NEWARK, N.J., J…

Read More...

News of Building Material

Consumers & Professionals Continue to Embrace Green Builds, Despite Economic Conditions…

Consumers & Professionals Continue to Embrace Green Builds, Despite Economic Conditions… (1408)

Administrator (News Building Material) 2012-01-27 16:00:26

Importance of Green Building Materials Expected to Continue to Grow Austin, TX (PRWEB) January 27…

Read More...

New Building Material to Improve Concrete Infrastructure…

New Building Material to Improve Concrete Infrastructure… (1300)

Administrator (News Building Material) 2012-01-20 17:03:38

By Joel Scanlon Construction projects rely on conventional concretes that are made up of water, ce…

Read More...

Phase change materials result in cost savings…

Phase change materials result in cost savings… (1862)

Administrator (News Building Material) 2012-01-18 19:19:46

January 18, 2012  By: Korky Koroluk Construction Corner A building material that absorbs heat duri…

Read More...

Recovery in the Concrete, Gypsum, and Plaster Products…

Recovery in the Concrete, Gypsum, and Plaster Products… (1346)

Administrator (News Building Material) 2012-01-17 16:10:19

Tuesday, January 17, 2012 Recovery in the Concrete, Gypsum, and Plaster Products Market to Follow R…

Read More...

Housing Recovery Buoys Furniture, Wood Imports…

Housing Recovery Buoys Furniture, Wood Imports… (1268)

Administrator (News Building Material) 2012-01-06 15:06:23

Furniture Imports Rise With Home Sales Bill Esler | 01/06/2012 5:28:00 AM   NEWARK, NJ - Furni…

Read More...

Ryan Homes Announces the Grand Opening…

Ryan Homes Announces the Grand Opening… (1893)

Administrator (News Building Material) 2012-01-05 19:11:21

Published: Thursday, Jan. 5, 2012 - 1:49 pm CLINTON, Md., Jan. 5, 2012  NVR, Inc. (NYSE: N…

Read More...

Cooper Industries Announces Three Acquisitions…

Cooper Industries Announces Three Acquisitions… (1860)

Administrator (News Building Material) 2011-12-30 23:25:29

Acquisitions Broaden Access to Key Emerging Markets, Expand Harsh and Hazardous Product Offering,and…

Read More...

News of Construction Industry

U.S. Companies Add 170,000 Workers in January…

U.S. Companies Add 170,000 Workers in January… (1441)

Administrator (News Construction Industry) 2012-02-01 17:18:43

U.S. Companies Add 170,000 Workers in January Companies added 170,000 workers in January, reflecti…

Read More...

More Corporate Subsidies, More Jobs?…

More Corporate Subsidies, More Jobs?… (1320)

Administrator (News Construction Industry) 2012-01-13 17:08:41

Friday, January 13, 2012 STATE – Last week, Gov. Chris Christie signed the “Grow New Jersey” bill…

Read More...

Rural Areas Slower to Rebound…

Rural Areas Slower to Rebound… (1590)

Administrator (News Construction Industry) 2012-01-13 17:07:06

By ANTOINETTE MARTINPublished: January 12, 2012 FOR whatever reason, homes sales picked up in New…

Read More...

NJ fares well in home safety report…

NJ fares well in home safety report… (1373)

Administrator (News Construction Industry) 2012-01-11 18:00:20

By Asia J Martin / The Cranford Chronicle Cranford Chronicle CRANFORD — Today the Insurance Inst…

Read More...

NJ makes it easier to build in sensitive areas…

NJ makes it easier to build in sensitive areas… (1300)

Administrator (News Construction Industry) 2012-01-10 09:35:40

January 10, 2012 9:21 AM ET By WAYNE PARRY TRENTON, N.J. (AP) - New Jersey on Monday passed leg…

Read More...

Real Estate May Begin to Come to Life in 2012…

Real Estate May Begin to Come to Life in 2012… (1306)

Administrator (News Construction Industry) 2012-01-06 09:05:44

By KATHLEEN LYNN MCT Published: Thursday, January 5, 2012 at 10:48 p.m. HACKENSACK, N.J. | The…

Read More...

Bill would let private groups build and run some New Jersey public schools…

Bill would let private groups build and run some New Jersey public schools… (1598)

Administrator (News Construction Industry) 2012-01-05 18:58:14

By Rita Giordano, The Philadelphia Inquirer Jan. 05--A pilot program that would let private manag…

Read More...

Hertz Equipment Rental Acquires DW Pumps…

Hertz Equipment Rental Acquires DW Pumps… (1817)

Administrator (News Construction Industry) 2011-12-31 13:21:07

HERC Acquisitions Support Revenue Diversification Strategy -- PARK RIDGE, N.J., Jan. 5, 2012 …

Read More...

/