Experts: 2012 could be beginning of resurgent housing market

January 03. 2012 1:56PM

Experts: 2012 could be beginning of resurgent housing market

At several points during the current economic recovery, the residential real estate market seemed poised for rebound, but New Jersey experts say in 2012, it's for real.

"Prices are the lowest in five years, interest rates are also very low … existing home sales are very strong," said Robert Burchell, distinguished professor at the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. "Everybody is asking the question: If I'm interested or I need to, when do I jump in? The jumping in point is probably going to be somewhere in 2012."

Burchell said the lining up of low prices and interest rates with decreasing unemployment, improved access to financing and the release of delayed foreclosure properties could create the atmosphere needed to get buyers active in the market.

"People are interested in timing, always trying to time when the bottom is going to occur," Burchell said. "If there's something out there, then people jump. The only thing that would cause them not to jump is if they felt that they bought something … it would be worth less in two years than it is now, and I don't think that's going to be the case."

"In the New York metropolitan area, values have held up," said Carl Nielsen, manager of Mortgage Master Inc.'s Wayne office. "If the economy strengthens, and if foreclosures get cleared out, things will stabilize and get better. The worst, in terms of the declines in values, is behind us."

Mortgage Master, a non-bank mortgage originator company, has been growing consistently in the past year, according to Nielsen, mostly due to a strong refinancing market while uncertainty limited mortgage originations.

Anika Kahn, a Madison-based economist for Wells Fargo, said a surge in refinancing should abate, with most borrowers already having taken advantage of lower rates. "Borrowers that remain on the sidelines are those underwater on their mortgage — and they will likely remain so for some time."

"The backlog of foreclosed homes has made some progress," Kahn added, noting a drop in shadow inventory — properties either in foreclosure that have not been sold, or homes owners are delaying putting on the market until prices improve — fell to a five-month supply in October 2011, down from seven months' worth in the year-ago period.

While a delay or stop in economic recovery would be an obvious derailment of optimism in the housing market, Burchell said any further protection of homes from foreclosure could also be a deciding factor in whether 2012 returns the market to growth.

"We were protected with a variety of sanctions during the bailout … this doesn't exist any longer. The banks are pulling their holds off of foreclosure," Burchell said. "There are going to be more foreclosures, and that's going to be an opportunity. … The big unknowns in foreclosure are one, how you go about it as a private citizen, and two, what your likely end result is going to be."

Burchell said the societal interest in protecting people from foreclosure may continue to delay the clearing of the market.