What's Going to Happen to Real Estate in 2012?

OC sales last year averaged 2300 each month. The inventory of homes for sale peaked for the year in May and continued to decline each subsequent month. The inventory is the lowest it has been in more than five years. The Median sale price was $400,000, down 2.4% from 2010. Even so, the 42 year history showed a 6.6% compound annual growth rate, which clearly outpaced inflation during the period. How is the market poised for 2012, and how will it affect buyers and sellers? The shrinking inventory can be expected to continue despite normal seasonal increases which occur in February and March. The market index has inched below the "neutral" point and rests at 4.1, which means we are moving toward a Seller's market. Basic economics suggests that prices will begin to rise in response to fewer homes on the market, provided sales trends remain steady. Buyers will be competing for fewer homes, especially in the more affordable price ranges. Mulitple offers are likely to reappear in many neighborhoods. Sellers will be encouraged by rising prices and should begin placing their homes for sale with the expectation of obtaining a higher price. Longtime homeowners will see opportunities to downsize or cash out before capital gains rates go up in 2013. Buyers will benefit from agents who have pocket listings that are not in the MLS yet. Super low interest rates will continue througout the year and compell action among the fence sitters. 2012 could be rising from the ashes!