I went to google images to find something “rosy.” I found this – a photo of a “Rosy lipped batfish.”
The Rosy lipped batfish is a rather apt spokesfish for this 2012 forecast…
Here are some choice excerpts from their always thorough review of the year ahead.
‘The drop will be driven by a significant decline in refinance originations, while purchase originations will increase only slightly. The economy will see another year of anemic growth in 2012, and then will grow somewhat faster in 2013. Refinance originations are expected to fall despite low mortgage rates as economic uncertainty lingers and fewer eligible borrowers remain”
“However, the uncertainty is not one-sided. We also see a path for the economy that could lead to above-trend growth in 2012. Housing inventory and shadow inventory is declining steadily. A more robust housing market recovery could spur faster overall growth. The odds of this scenario, however, are low and we think the most likely outcome is another year of frustratingly slow economic growth and stubbornly high unemployment.”
“We expect that mortgage rates are at or near their low points, but we have been wrong on this call before. Our rate forecast assumes that the Fed maintains short-term rates near zero for the next two years, and also assumes that mortgage-Treasury spreads remain wide, given the current supply and demand imbalance in the market. If the economy tips into recession, rates would stay lower for longer, but we do not anticipate they would drop significantly. If the economy recovers more quickly, even with the Fed’s Operation Twist, longer-term rates could rise faster.”
“A faster economic recovery led by the housing market would mean faster home price growth and more sales volume, increasing purchase originations somewhat, but would cut off refinance volume sooner than in our forecast.”
Here’s the forecast summary:
• Slow, sloggy GDP growth
• The unemployment rate will increase slowly and will continue to slog for the next decade
• Fixed mortgage rates are expected to remain low by historical standards, finishing 2011 at around a 4.5 percent average for the year, falling slightly to 4.4 percent for 2012 and climbing back up to 4.9 by 2013.
• 2012 home sales will mirror the sales performance of 2011 nationwide, and new home sales will lead some growth in 2013
• Certain markets are showing year over year appreciation
• Purchase originations will likely decrease in 2011 from 2010, totaling $400 billion from an estimated $472 billion in 2010. Seeing as 2012 will likely be another year of slow economic growth, purchase originations will increase slightly to around $412 billion for the year. As the economy picks up a little more speed in 2013 and home sales and home prices also start to increase, purchase originations are expected to increase to $770 billion for the year.
• Despite lower mortgage rates people have “REFI” burnout and with rates at historic lows, many won’t return for “another” REFI – weak appraisals have hurt this phenomenon as well
Here’s some love for the MBA, who provided most of the content of this post…
The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation’s residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA’s Web site: www.mortgagebankers.org.
Stay tuned to the Intown Insider for the Metropolitan Atlanta 2011 Q4 residential real estate statistics – coming in the next few days…you’ll find that we have a rosier 2012 outlook here in Atlanta, at certain price points and in certain neighborhoods.