Some Facts / Some Opinions

There are 117 million households in the U.S.

40.5 Million Rent

52.6 Million own with a loan

23.4 Million own outright


After almost 5 years in this market and a 6 trillion dollar loss in home equity, little has been accomplished by way of a recovery for housing. All of the programs sponsored by the federal government have been largely ineffective.

During the past 5 years more than 3 million families have lost their home. 6.4% of mortgages made between 2004 and 2008 have ended in foreclosure and an additional 8.3% are at immediate risk. On top of that, approximately 18% of Fannie and Freddie loans are underwater, and before I forget, 44% of the loan modifications that were granted are more than 3 months late. Don’t overlook the estimated 4.2 million homes in the shadow inventory that exists.

As we look at 2012, I don’t see great things happening that will revive the market. The political environment seems to be letting the chips fall where they may. Fannie, Freddie, F.H.A are all underwater themselves. The new HARP 2.0 program may help some underwater homeowners, but not before mid March or April 2012. 43% of homes in the Inland Empire are underwater.

What can we look forward to in 2012?

- Low interest rates will continue.
- The idea that if we hang on prices will come back is gone. Sellers that are not underwater and have equity will proceed to the market place.
- We still have lots of people wanting to buy. Remember with 9% unemployment, 91% are still working.
- Buying is now cheaper than renting.
- Investors are very actively buying.
- Prices we haven’t seen in years will attract home buyers and investors.
- Short sales are much easier to complete and getting easier everyday.
- The lenders are now initiating short sales first.
- REO inventory will increase after the 1st of the year.

There are something’s that might be on the horizon. The biggest is principle reductions. They could be implemented by lenders; at the discretion of the Fed; or by bankruptcy judges or some other way. The odds are increasing that principle reductions will find its way into the cards next year. Remember, this will be a Presidential Election year.

One thing is for sure, the shadow inventory will begin to clear out. The banks need the cash and the Feds are through kicking the can down the road because that has not worked either. If it’s in your plan to own rentals, you have about the next 2 years to buy them.