18 Jan Five Key Issues for 2012 Housing

While many housing markets rose together during the boom and fell together during the bust, they’re coming out of the downturn at very different speeds, and so it’s no longer a matter of a “national” housing market. We’ve seen recovery happening on a local market level, and at very diverse rates.

With that in mind, here are the five key issues as published by the Wall Street Journal that will determine the housing market in 2012:

1. Confidence and jobs: The housing market still needs the economy to add more jobs to stimulate demand for home purchases and to prevent mortgage delinquencies from rising. The good news is that housing is more affordable than it has been in decades. But many that are considering buying are not striking because they are concerned that the prices will continue to drop. Others don’t want to buy a house until they have more evidence that they’re not going to get laid off or see their hours cut back.

2. Foreclosures: Whether home prices hit a floor this year also relies on how banks manage a huge overhang of foreclosed homes that they haven’t yet taken back and resold. Banks and other mortgage investors own around 440,000 foreclosed properties, but there’s another 3.4 million loans in foreclosure or serious delinquency.

3. Rents: Apartment rents are rising as vacancy rates drop. If low mortgage rates aren’t enough to give urgency to buyers, rent hikes could accelerate their decisions to take the plunge. This is a good thing.

4. Mortgage credit and rates: Federal policymakers have taken extraordinary steps to keep mortgage rates low and federal-backed entities are responsible for backing nearly nine in 10 new mortgages. But it’s still hard for many buyers to get a loan because banks are demanding lots of documentation of borrowers’ incomes, and appraisals are tanking some deals. Banks will need to put their loan problems behind them before there’s much easing in lending standards.

5. Regulation: Many analysts don’t expect Congress to make major changes to Fannie Mae and Freddie Mac during the election year, but several major regulatory changes could significantly reshape the future of the lending landscape in 2012.

Meanwhile, the regulator that oversees Fannie and Freddie is revamping the way that mortgage companies are paid for collecting loan payments.

What other key things do you think will affect the market this year?