Let me start this post with the caveat that no one can accurately predict what is going to happen on the micro level of the property market. There are just too many variables and unforeseen factors.
Disclaimers put to the side I’m going to make some predictions of things I see happening in the luxury real estate markets I mainly work in of Paradise Valley and North Scottsdale.
1. People Are Going To Start Enjoying Real Estate Again
When a market makes a moves to the downside you often get a situation where the market becomes described as oversold. This is a measure of sentiment. Buyers have seen the swing down and in a panic sell at prices below the true value of the asset they hold.
Real estate is different to stocks. You can’t live in a share, bond or option. Oversold for the housing market is more like how market sentiment is for the sector in general. People just lose interest in owning a home, have negative ideas about the real estate market and generally don’t enjoy thinking or talking about real estate.
My prediction is that in 2012 after a full 6 years of downward pressures real estate will finally become fun again for consumers. Their long term planning will again involve where they see themselves living in the future and dreaming of the future homes they will own.
My Prediction: Real estate as a sector will finally bring a smile to peoples faces again.
2. Downsizing Will Continue
After 2006 the size of homes on peoples wish list got smaller. Downsizing was an affordability issue mainly in those early days of the market correction. While affordability is now at far kinder levels due to the combination of both lower prices and low interest rates the appetite for larger homes remains limited.
I think the downturn created a paradigm shift in how people thought about what their home should be. Downsizing became a goal rather than a necessity. The advantages of lower energy costs, less maintenance, the ability to lock it and leave it all become more valuable than that 12 person home theatre.
My prediction: Demand for high quality, high end finish homes will be strong but unlike before size won’t be everything.
3. Urban Living Will Gain Popularity
One of the things I have noticed in addition to the demand for smaller homes is the wish amongst clients to be closer to the action. To experience more of an urban city style of living.
Some of the developments in and around Scottsdale Waterfront had the misfortune of really selling right at the top of the market. The result has been many, many distressed properties hitting the market and generally confusing consumers about the entire area.
Last year many of those distressed properties finally cleared out. Developments like the Waterfront Residences and Optima Camelview are starting to really come to life again.
Waterfront is starting to feel vibrant and busy. Of course it’s even more happening now Marta Walsh’s own office is at Waterfront 🙂
My Prediction: Continued demand among young professional buyers, empty nesters and even out of town buyers to live in a more urban setting closer to shopping, dining and fun.
Those are my main predictions for real estate in 2012. I think it’s going to be a strong year for real estate and I hope all your buying and selling efforts go to plan. Call me if you need any help making your real estate dreams come in 2012.