We must begin with the obvious disclaimer that economic forecasting is more inexact than weather forecasting, but we will take our best guess at what lies ahead of us in the coming year. We follow many analysts, remembering however that conventional wisdom told us one year ago that mortgage interest rates would rise by July when in fact they declined to historically low levels and stayed there.

Pending home sale numbers have risen for 5 consecutive months nationwide, and there is reason for optimism regarding sales within our region as well. Unemployment numbers, while still very high, have improved. No matter how you feel about the recent elections, it appears that the result is pro-business, less tax, which logically should improve private sector job creation through 2012. The American Dream of home ownership is alive and well, and demographics suggest increased demand in the future. There is reason for improved consumer confidence. With these factors at work, prices should begin to rise slowly again, especially as unsold inventories decrease.

Two factors may work against the improving market, at least in the very near term.  We cannot ignore the seasonality of the market.  Winter months are routinely the least active of the year.  And mortgage rates have crept upward from their lows.  However, many of us contrarians feel that this interest rate movement may actually convince reluctant buyers to get off the fence, the worst is behind us and it’s time to buy their home while rates are still extremely attractive from a historical viewpoint.

My conclusion:  we hit bottom, but without much of a bounce.  Remember however that compared to others, our region has tended to be the tortoise, not the hare. In some respects that can be a good thing.  Just ask those in Las Vegas or many areas of Florida that continue moving in the wrong direction.