• Sales Prices increased 9.5% over 2011

• Inventory declined 1/3

• Sales Remain steady

• Inventory of homes down to 5.2 months

Florida Real Estate Looking up
Speaking in Orlando in December, Dr. Lawrence Yun, chief economist for the National Association of Realtors®, said many Florida markets are showing sharp drops in inventories of homes for sale – a sign that demand is picking up and prices are stabilizing. “That’s a major change from just a year ago,” he said. “Buyers have stepped back into the Florida market.” Adding to that sentiment, “Our state is in a mini-recovery,” said Florida Realtors® Chief Economist Dr. John Tuccillo at the state association’s 2012 Real Estate and Economic Forecast Conference in Orlando. “Sales are trending up, listing inventories are falling, the supply of lender-related properties has stabilized, and we are seeing multiple offers on homes in some local markets.”

National Mortgage Rates Dropped in 2011
Jan. 13, 2012 –  Fixed mortgage rates fell once again to a record low, offering a great opportunity for those who can afford to buy or refinance homes. But due to tough lending standards, few are able to take advantage of the historic rates. Freddie Mac said Thursday the average rate on the 30-year fixed mortgage fell to 3.89 percent.

Looking Ahead to 2012
There is still a large shadow inventory of foreclosed homes and delinquent homes that have not made it to the market. Banks have slowed down the release of these homes, which has helped to stabilize markets, but also continues to exert a downward pressure. Many expect the banks to release the foreclosed homes slowly. But there are plenty of investors wanting to absorb the foreclosed homes. So it is hoped that banks will begin releasing foreclosed properties again. The downward pressure will not go away until vacant and abandoned homes are put in responsible ownership.

Current lending standards are more stringent than ever. Making home buying very hard for first time homebuyers. This limits the sales volume, unnecessarily. It was very easy lending that lead to the economic downturn. But now the pedulum has swung too far the other way. Current lending practices are squeezing the flow of sales. Plus, high-end buyers are reluctant to pay the high premiums that banks are charging for larger mortgages, restricting the high end source of homebuyers as well.

The two buying demographics that have picked up in Central Florida are baby boomers and international buyers. Cash-rich individuals in these two groups are enjoying the affordable home prices. But the aging baby boomers are looking for homes where they can age in place with master bedrooms downstairs. Two story homes and townhomes are not as suitable for this demographic.

In summary, the banks and their policies are expected to exert the strongest influence on  the residential real estate market in 2012, with overall expected slow, continual improvement in the housing sector. And all of the recent forecasts have a huge caveat that we do not know what will happen in Europe.