Costa Mesa Real Estate Market Forecast 2012

 

With 2011 a few days behind us, it is definitely time to look forward for what the trends will be for the Costa Mesa Real Estate Market Forecast 2012 this coming year. My crystal ball is never as crystal-clear as I’d like, but I do think that we can expect a gradual economic recovery to move local Costa Mesa real estate a few steps back toward normal in 2012. Ultimately, I think we are still about three years away from a “normal” market, one that has more than 90% standard sales.

Let’s look at what we had last year:

• Total sales – 655
• Standard sales – 368
• Short sales – 153
• REO sales – 100
• “other” – 34
• Total Distressed = 39% (REO and short sale)

There has been lots of good news lately about real estate in general, and Costa Mesa real estate continues with the trend:

The National Association of Realtors released a report saying that the pending home sale index (homes in escrow) hit a 19 month high, the highest point since the federal tax credit was available to buyers. Great news! I have to argue that it is actually better to buy now (without the credit) because of the ridiculously low interest rates ( sub 4% now), and that purchasing power is actually much higher with reduced prices since that time.

Delinquencies will be down in numbers (those late making mortgage payments), as will short sales. I think we will see our Costa Mesa short sale number down to about 30% of the market by the end of the year. Our number this year was in the high 30 to low 40 percent range.

There is a backlog of bank owned inventory, so unfortunately we will see a much great share of REO inventory on the market locally in Costa Mesa. I wouldn’t be surprised if this number totals as much as 20% of the market by year end.

Rents will rise, as they did last year. Rentals were tough to find, and when you found one, you had to move quick. The rents were definitely higher last year, and they will continue to do so this year. That’s a bad thing, for renters, but investors will find it a great time to purchase investment properties. I looked at a condo with a client last night, where if you put 20% down the mortgage would be $688 a month! I know that 2 bedroom unit would rent for at least $1400, which is crazy to think how cash flow positive that investment is right now.

Prices will continue to stabilize. The entry level housing price will not give much more, as homes and condos on the low end this year sold FAAASSST. Homes at the upper end of the price scale will continue to adjust slightly downward, as more short sales and REO listings on the higher end in better neighborhoods drag those prices down with them.

Mortgage rates will inch up which will be a bad thing if you haven’t purchased yet. Probably good for the market though, as we cannot sustain these unbelievably low rates without forcing some kind of inflation. Action time for you! Jump on this Costa Mesa market because the prices will not go down much lower, we appear to be near the bottom. The rates will definitely help you either afford to buy with a low monthly payment, or help your purchasing power enabling you to buy more house.

Here are what others are saying:

• Home prices will rise in 2012 (says Freddie Mac)
• Home prices will fall in 2012 (says CBS News)
• Mortgage rates will rise in 2012 (says American Banker)
• Mortgage rates will fall in 2012 (says the LA Times)

Good year to sell? Depends on your situation. Prices won’t change much, so I wouldn’t hold out for a big upswing. Need help in Costa Mesa? Feel free to give me a call at (714) 743-9882 or E-mail me here. Have a great new year!