A Look Back at Housing Market Predictions For 2012

Each new year analysts and economists like to make predictions for the year ahead.

So, today, with well over half the year in the books, it’s a great time to take a look back to see how the experts’ predictions are faring.

As 2011 came to a close, the housing market was showing its first signs of a come back. Home sales were strong, home supplies were nearing bull market levels, and buyer activity was getting stronger.

Homebuilder confidence was at its highest level in 2 years and single-family housing starts had made its largest one-month gain since 2009.

On top of that, the 30-year fixed rate had just dipped below the 4 percent barrier and looked poised to stay there.

There was a lot to be optimistic about in January 2012.

Yet, there were obstacles for the economy. The Eurozone’s sovereign debt issues remained in limbo, oil prices were spiking, and the Unemployment Rate remained high — three credible threats to growth.

At the time, analyst predictions for the economy occupied both ends of the spectrum, and everywhere in between.

Freddie Mac said home prices would rise in 2012, whereas analysts at CBS News said they’d fall. Both made good arguments.

As another example, American Banker said mortgage rates would rise in 2012. The LA Times, said just the opposite. And, the problem with these predictions is that each party can make such a sound defense of their respective positions that it’s easy to forget that a prediction is really just an opinion.

Nobody can know what the future holds.

A lot has changed since those predictions were made :

• Job growth slowed sharply after a strong Q1 2012
• Oil costs dropped rapidly beginning in early May
• Spain and Italy have joined Greece as potential sovereign debt trouble-zones

Now, none of this was known — or expected — at the start of the year yet each has made a material change in the direction of both the housing and mortgage markets.

Today, home prices remain low and 30-year fixed rate mortgage rates now average 3.56% nationwide. Home affordability is higher than it’s been at any time in recorded history and, at least for now, low down payment mortgage products remain readily available.

The experts never saw it coming.

6 months from now, the markets may be different. We can’t know for sure. All we can know is that today is great time to be a home buyer in Cincinnati. Home prices and mortgage rates are favorable.