Since the housing downturn, optimistic predictions the real estate market have been forecasted annually. However, what we have seen in retrospect is that home buyer incentives along with other housing stimulus measures have only acted to maintain an ailing housing sector from deteriorating further. Some still await the market bottom. And although 2011 revealed additional weaknesses in global economic systems as well as the unintentional consequences of policy and regulation, 2011 felt as if it was the most optimistic year in real estate since the downturn.
2011 will be remembered as the year that the National Association of Realtors (NAR) revised existing home sales down 14.3% for estimates between 2007 and 2010 (data released on December 21, 2011 and available on realtor.org). Regardless of the re-benchmarking of data, the NAR has announced that existing home sales in 2011 continue to strengthen as November’s data indicates increased sales from the previous year (really?).
2011 was not the year for home price gains, however. Home prices continued to decline nationwide. However, the Washington DC and Detroit metro areas were the only two regions that posted positive home price gains from the previous year according to the S&P/Case-Shiller Home Price Index.
2011 was the year that housing finance reform continued to crawl forward, while Wall Street reform seemed to move quickly with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Although Dodd-Frank seemed to be focused squarely on Wall Street, it appeared to be far reaching with the requirements such as the 20% down payment Qualified Residential Mortgage (QRM).
2011 will be remembered as the year that the Eurozone almost collapsed. The financial déjà-vu that played out over the summer (and is still yet totally resolved, mind you), threatened markets worldwide- including the U.S. housing market. The sharp economic decline, that some braced for, was averted.
2011 was the year that we saw a bifurcated market become increasingly significant. The upper-bracket/luxury home market appeared to stabilize ahead of other housing, as upper-bracket/luxury housing activity remained strong. In fact two of the most expensive homes in Washington, DC sold this year! Reports that Evermay, the DC mansion that was originally listed for $49 Million, sold for $22 Million in July; while Halcyon House was reported to sell a couple of months later for $12.5 Million.
Regardless of the continued efforts of government preparedness campaigns (remember the Center for Disease Control “Zombie Apocalypse” preparedness campaign on blogs.cdc.gov?); 2011 will be remembered as the year that nature made a point about preparedness. If you weren’t concerned about preparing for the Mayan 2012 prophecy; then enduring hurricanes, floods and an earthquake probably had you at least checking your homeowners’ insurance.
As foreclosures declined in 2011, it seemed as if reports of mortgage lender abuses increased. Lenders appeared to be under fire from class action lawsuits as well as attorneys general for lending practices and foreclosure procedures; Bank of America recently reportedly settled a lawsuit for $335 Million.
Alas, the year is almost over; having us searching for fond memories of 2011 and wondering what will 2012 bring. Some look for home prices to make some gains in the coming year (homepricefutures.com), however more importantly you can probably expect the housing market to be glamorized in the pomp and circumstance of the election cycle of 2012.
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by Dan Krell