Sun State Savings

As the new year begins, there are no short­age of sto­ries telling us what to expect in 2012. Hous­ing fin­ished 2011 with momen­tum and mort­gage rates closed at the low­est rates of all time.

Some expect those trends to con­tinue through the first quar­ter and beyond. Oth­ers expect a rapid reversal.

Who’s right and who’s wrong? A quick look through the news­pa­pers, web­sites and busi­ness tele­vi­sion pro­grams reveals “experts” with oppos­ing, well-delivered argu­ments views. It’s tough to know who to believe.

For exam­ple, here are some “on-the-record” pre­dic­tions for 2012 :

• Home prices will rise in 2012 (says Fred­die Mac)
• Home prices will fall in 2012 (says CBS News)
• Mort­gage rates will rise in 2012 (says Amer­i­can Banker) 
• Mort­gage rates will fall in 2012 (ays the LA Times)

The issue for buy­ers, seller, and would-be refi­nancers nation­wide is that it can be a chal­lenge to sep­a­rate a “pre­dic­tion” from fact at times. 

When an argu­ment is made on the pages of a respected news­pa­per or web­site, or is pre­sented on CNBC or Bloomberg by a well-dressed, well-spoken indus­try insider, we’re inclined to believe what we read and hear.

This is human nature.

How­ever, we must force our­selves to remem­ber that any analy­sis about the future — whether it’s housing-related, mortgage-related, or some­thing else — are based on a com­bi­na­tion of past events and per­sonal opinion.

Pre­dic­tions are guesses about what might come next — noth­ing more.

For exam­ple, at the start of 2009, few peo­ple expected the 30-year fixed rate mort­gage to stay below 6 per­cent, but it did. Then, at the start of 2010, few peo­ple expected the 30-year fixed rate mort­gage to stay below 5 per­cent, but it did.

All we can know for cer­tain about today’s mar­ket is that both mort­gage rates and home val­ues are low, cre­at­ing favor­able home-buying con­di­tions nationwide.

At that start of last year, few peo­ple expected mort­gage rates to even reach 4 per­cent. Today, rates “with points” price in the 3s.

What 2012 has in store we just can’t know.

Tags: Home Values, Mortgage Rates, Predictions

This entry was posted on Wednesday, January 4th, 2012 at 6:45 am and is filed under The Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.