fig® - Downtown Lancaster

2012: Is it the end of the world?! We don’t believe so. Although, it does seem that we have flirted with Armageddon in the last few years: Global financial meltdowns, political upheaval in the Middle East, an aggressive nuclear Iran, Russian political turmoil, tidal waves, earthquakes, nuclear meltdowns, the list goes on…

Even through all of this uncertainty and tribulation the economy seems to finally be lifting itself out of the doldrums. With that, there is a sense of optimism permeating the area’s real estate community as we move into the new-year. All indicators point towards economic recovery in 2012. Even so, the desired ‘strong robust recovery’ is likely to be a matter of years away instead of months.

On the bright side, the worst seems to be behind us, barring any more snakes in the grass (or dragons, as in China’s real estate bubble). Here are a few national factors that show promising signs for the national economic outlook:

• Wall Street is steadily rebounding after the European Union has backed away from the edge of the abyss.
• Corporate profits are rolling back into black, although compensation for the general workforce has yet to match pace (ahem, occupy what?).
• A growing economy will mean more job creation in 2012. Nationally, several million new jobs are projected. Unfortunately, this will not be strong enough growth for national unemployment rates to push much lower than the current rate. Growth is better than loss…

So, what does this mean for Real Estate in Lancaster?! Would you like the good news or the bad news first?

In 2012, Lancaster will see a slight rebound in the market and prices will appreciate, slightly. It may be more accurate to say that the prices will stabilize after the market’s roller coaster ride in 2011. However, Lancaster has a resilient economy and so, a resilient housing market. While we have fared better than most around the country, we have still seen the local market take a substantial hit.

The bad news: The market will be held back from a quick robust recovery for a number of reasons. Primary factors will include:

1)     The economy, while growing, is still in survival mode. Credit is still tight for anyone looking to borrow. Home prices have fallen, leaving many local homeowners with little to no equity. No equity means no extra cash for the down payment on a new house and little room to negotiate as they attempt to sell.

2)     Current inventory: housing inventory is high. Many homes remain on the market for extended periods of time, as buyers are both limited and selective and sellers are often in a tight spot.

3)     Shadow market: many people that want to sell their homes have waited for better market conditions to move forward. A positive market trend will give potential sellers the courage to list their home: adding to an already over loaded inventory.

4)     Foreclosures and short sales will continue to inhibit (but not eliminate) the appreciation of non-distressed properties.

The good news! The market will begin to rebound in the 2012. There will be a number of factors contributing to an uptick in the real estate market this year. Primary factors will include:

1)     Interest rates for a 30-year home mortgage are currently below 4%. 4%?!

2)     Prices are at bargain levels. With a deluge of inventory, buyers have a strong hand to negotiate on price point.

3)     The national economy will prove to hold a pattern of slow and steady recovery in 2012. As positive economic indicators outweigh the negative indicators, buyers will be encouraged to come out of hiding.

4)     Lady Gaga is moving to Lancaster. This will revolutionize Lancaster’s real estate market. As Gaga spreads the word, pop culture moguls will become enlightened to our area’s authentic character and elegantly rustic culture. In turn, Hollywood will flock to Lancaster in droves, in a fulfilling attempt to find an understanding of meaningful culture. (All of Hollywood in Lancaster? We may have spoken too early when we noted that we have averted Armageddon.)

Lady Gaga: New Lancaster Home Owner

The moral of the story:

The first half of this year will likely yield the strongest position, to date, for buyers: Interest rates and prices will remain at ideal levels. As the buyer, you have the upper hand. But do not get carried away. The market is in your favor. However, you will likely still need to pay around market value for the house you want to buy.

If you are looking to sell your house or you are already trying to sell your house, be prepared to have a serious conversation with your Realtor about your asking price. You CAN sell your house. Selling your house in this market comes down to a realistic asking price, good presentation and a fair amount of patience.

All in all, 2012 promises to be a year of renewal and growth. From the storm clouds of the past several years, we will see economic promise rising over the horizon.

Happy New Year to all. The best wishes for you and your family in 2012.

-Michael Glick