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Health & Fitness

End of the Year Market Report Update

Where did 2011 leave us in regards to the local Real Estate market? Things are looking up!

Is 2012 going to be the year the Real Estate market bounces back? It’s a slow and steady climb but all signs are pointing that way, and 2011 ended on a high note to start us off on the right foot.

2011 was the year that the market began to move off the bottom. The focus now turns to how fast will we get "back to where we were?" With the extent of the market decline and the economy's slow growth; most of the real estate industry is cautious in predicting getting back to peak levels. Over time, values will return to and even exceed peak levels and they will do so faster than expected (just as we fell faster than expected). What we are seeing day-to-day "on the ground" is strong pent-up buyer demand for residential real estate and buyers willing to pay more than the asking price. This activity is not being reflected in the national statistics since they tend to be four to eight months behind current market activity.

Based on a steadily improving economy and using a combination of historical appreciation rates and an estimate of the decline in foreclosed properties, the following is our current forecast of home values. We have moved from a peak valuation point in 2005 to the bottom point in early 2011. A little over five years to hit the bottom of the market and it should take about the same amount of time to recover as well. Interest rates are the biggest wild card in a steady recovery. With property values at a low-point, there is room in the market for higher rates without hurting demand. However, if rates rise dramatically, three to four years from now when values have recovered, to a degree, this could result in another market set back extending the "back to peak" point a few years. The main point of this exercise is to show that "peak" values are a few years away, so if a seller is waiting for their 2005 values, they should plan on a few years, not months. But, keep in mind, all boats rise in a recovery, so as a seller waits for their value to rise, the property they want to purchase rises as well (but in the future, at higher interest rates and payments).

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The banks are expected to increase their inventory release rate, which will have some impact on appreciation rates this year. However, a large share of those properties are in poor condition and therefore will tend to draw investors and bulk buyers, with less impact on the typical single family property sale. Overall, it cannot be said enough that 2012 and, probably, 2013 will still be in that perfect balance of being an improving seller's market as well as a great buyer's market.

As noted it’s going to take years to “recover” but we are on our way up and it’s a great time to be in real estate, both selling and buying! We are happy to see our state grow and excited for what this new year is going to bring!  

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