Slowly, a recovery seems to be taking hold. “More jobs, rising rents, a rising stock market, and continuing high affordability conditions” are combining to get more people into the market, says NAR Chief Economist Lawrence Yun. On the commercial side, all the major sectors are seeing improving fundamentals, and more positive trends are expected in 2012. Against that backdrop, we asked some of you to tell us what you expected to be your best source of business this year.

Residential

With prices expected to rise slightly in both existing- and new-home sales in 2012, buyers may not get quite the same bargain they got last year. Still, conditions remain favorable for buyers, and NAR is forecasting a 5 percent increase in existing-home sales over 2011. Here are three pockets of opportunity.

1. International investment. With U.S. real estate values down, a favorable currency exchange rate, and the promise of a stable place to invest while Europe deals with debt crises in Greece, Spain, Italy, and other countries, foreign buyers continue to stream steadily to the United States.

“People [are trying] to move their cash somewhere safer,” says Brian Block, broker-associate with ­RE/MAX Allegiance in Arlington and McLean, Va.

Elaine Murphy Carlson, a broker-associate with RE/MAX Palos Verdes Realty in Palos Verdes Peninsula, Calif., says foreign investors who stayed away during the darkest days of the financial crisis are coming back. Indeed, NAR’s 2011 Profile of International Home Buying Activity shows foreign households bought $82 billion worth of residential real estate last year, up from $66 billion in 2010.

Block says the investors he works with are professionally successful individuals with cash available. “They will buy when they see a good deal,” he says. He has gained investor business by demonstrating a solid knowledge of the market and finding networking opportunities, from local Chamber of Commerce meetings to regular real estate industry functions.

2. Distressed inventory in centrally located neighborhoods. Affordable housing in inner-ring suburbs or center city areas may be real estate’s sweet spot in 2012, Block says, because buyers today aren’t looking just for bargains, they’re looking for convenience and lifestyle amenities. A 2011 survey of U.S. adults conducted for NAR by research firm Belden Russonello & Stewart seems to support Block’s assertion. Nearly six in ten adults (58 percent) said they’d prefer to live in a neighborhood with a mix of houses and stores and other businesses within an easy walk. more

Block says he has seen first-hand the shift among both first-timers and retirees toward smaller, close-to-the-city homes in walkable neighborhoods. He reaches out to potential clients by using social media and blogging to talk about issues like lengthy commutes.

3. Rentals. Rising rental rates in many markets are making home ownership a more appealing option, especially for those seeking to buy distressed property. But many households aren’t financially ready to buy, either because of credit dings or the continuing overly tight credit restrictions of lenders. Others are waiting to make sure home prices have bottomed out. That’s why many real estate companies have shifted their business model to include rental and property management.

Bill Bloomberg, broker-owner of Distinctive Rental Homes in Eden Prairie, Minn., opened his business in 2011 with high-end rentals as his central focus, providing assistance to both renters and owners who choose to rent rather than sell their property.

Bloomberg, who has nine years of experience working in conventional real estate sales, says helping owners find tenants is a great way to retain clients who might otherwise have turned to another real estate professional.

“If a listing isn’t selling, it’s usually because of price. However, most owners are going to try to switch to another agent first to see if that will make a difference,” Bloomberg says. “Presenting an option such as renting can prevent that from happening.”

And when owners opt to rent their property rather than sell it, they may be providing a unique opportunity, helping renters get one foot into a neighborhood that’s currently beyond their buying power, says Gina Chirico, sales associate with Lattimer Realty in Fairfield, N.J.

Best Year Ever!

Real Estate Today, the radio show about all things real estate, is opening the year with a series of shows devoted to helping sellers, buyers, property owners, and investors make 2012 the “best year ever.” The weekly two-hour show is broadcast in 165 markets and in all 50 states. To embed the free audio player on your Web site, visit www.retradio.com.

 

To attract rentals and tenants, Bloomberg says, he keeps up with sites that renters frequent such as Craigs­list and syndication sites such as ListHub, Postlets, and vFlyer. He also relies on referrals, listings bringing other listings, and basic cold calling.

“As long as wages go down, traditional homes sales will suffer,” Bloomberg says. “People say I’m pessimistic, but understanding how the economy works has helped me make the adjustments I needed to make it in my business.” Another plus, he says: Rentals are less stressful than sales.

Meanwhile, Bloomberg recognizes that today’s renters could well become buyers of the future. The majority of renters (63 percent) say they are at least somewhat likely to purchase a home in the future. Among them, young adults (age 18 to 24) have the strongest aspirations for home ownership, according to an NAR survey of 3,793 adults conducted by Harris Interactive and released in January 2011.