Real Estate: Sales Increasing. Prices – Not Yet.

In yesterday’s blog post, we explained that many experts believe home sales will increase in 2012. Today, we want to make sure that our readers realize that it will still take time for prices to begin to appreciate. Pricing is about supply and demand. Though demand is increasing, there is still a large supply of homes for sale in many markets and the National Mortgage Settlement will probably mean over a million distressed properties (foreclosures and short sales) will enter the market this year. Two major surveys spoke to this point in the past week.

The Home Price Expectation Survey asked 104 leading industry experts where they thought prices would be at the end of 2012. The average of those opinions showed that the experts believe prices will depreciation by about one percent (.72%).

The Urban Land Institute released results from their survey also. In their report, 38 leading real estate economists/analysts, representing major real estate investment and research firms, felt that prices would remain flat throughout the year.

Demand will increase dramatically this year. However, it won’t drive prices upward because of the supply of inventory for sale in most markets.