Good news. Bad news. Real Estate Mixed Bag in 2010
The housing market has been sending some serious mixed signals for months now. The one certainty is that the real estate market is in flux, and will likely be for months to come.
FIRST, THE GOOD NEWS:
- Although interest rates have been increasing, they remain at historical lows. This is good news for buyers who act quickly, as none of the experts expect rates to remain this low later in 2010.
- The $8000 tax credit for first time buyers was expanded to include existing home owners, as well. The timing of this offer is crucial. Buyers must close on or before June of 2010 to collect their free cash.
- Home prices and demand have steadily increased month over month throughout October of 2009.
- Although some markets may slide a bit further, we are definitely in the last innings of the crash. Even if we have a bit more downward pressure, 2010 will be the bottom of the housing crash.
- Home seller’s who use the power of the MLS and the Internet to realistically market their properties, will see more buyers and will have much more pricing power than they’ve experienced in years.
- In markets, such as Phoenix, you can buy a new home for $800 a month, making it cheaper to own a home than rent it.
THE BAD NEWS:
- According to Bob Curran, director at Fitch Ratings, a mountain of foreclosures will hit the market in 2010. And, a 10.5 percent unemployment rate will cause a surge in new homeowners that will fall into default.
- Per Lawrence Yun, chief economists with the National Association of Realtors (NAR) expects a record 3 million foreclosures in 2010, up from 2.1 million in 2009.
- John Burns, president of John Burns Real Estate Consulting, is even more bearish. He thinks 50 percent more people will lose their homes to the bank than they did last year. Why? Lenders were under pressure to postpone foreclosures in favor of loan modifications. And, the banks weren’t staffed to handle all the defaulted loans, as they now are.
- The Office of Comptroller of the Currency and the Office of Thrift Supervison released a report that said the results of the loan modification program was disappointing. 61 percent of the loans that were modified are now in default again. The offices predict another wave of foreclosures in 2010, which could cause prices to fall another 5 – 10 percent before the market stablilizes.
- The Federal Reserve plans to end the program that has kept mortgage rates so low for so long. Rates have already passed the 5 percent mark in anticipation.
- The first time buyer and existing home buyer tax credit program expires in early 2010. To qualify for the stimulus, buyers must purchase by April and close no later than June of 2010. This program has certainly lured buyers into the market place and its expiration will take a toll on demand in the 3rd and 4th quarters.
InfoTube Prediction: Since the housing market peak in the summer of 2006, home prices have dropped over 30 percent on average. Prices in some markets such as Las Vegas, Phoenix and parts of Florida and California have fallen more than 60 percent. Some markets have further to go, but we are in the final innings of the crash. Even if we go lower, we will see the bottom in 2010. But, don’t look for a rebound off the bottom. The damage was too deep and too systemic for a “V” shape recovery. The housing market will skate along the bottom for quite a while and it will probably be 2013 before most people notice any rebound.
Thank you for visiting InfoTube.net. There hasn’t been a better time to buy or sell a home in 4 years. Check out our website for over 20,000 fresh home listings and feel free to place your property on our site for FREE. We’ve been helping buyers and sellers connect since 1988. We can help you, too!!
I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.
Alisha
http://pay-dayadvance.net
I try to stay up to speed on what’s going on in this space because it’s where my passion lies. I have to say that this article provides a rare insight in to the subject and delivers information that isn’t easily found. Congratulations to an author I will continue to follow. Loan Modification
The slump around Atlanta, particularly in NE Atlanta, hasn’t been as bad as in other cities, but if we’ve only seen the first wave, and if there are 33% more foreclosures in 2010 (as the blog/gov’t suggests), then the recession is far from over. Houses should be even more affordable soon… one can only hope that the programs to extend low mortgage rates and buyer tax credits will be extended, or very few houses are going to sell. Since that isn’t a given, aggressive marketing of a property becomes an imperative. Thanks to InfoTube.net and flat fee MLS programs, homeowners like ourselves can save a bit of money, by investing time and effort into our own marketing and sales efforts. Hopefully, more buyers will overcome the urge to freeze in fear of what “might” happen, and instead, take advantage of the most affordable housing market in a decade, choose wisely, and close a deal. We appreciate the help of InfoTube and the ongoing helpful content. — Steve
Your comment about rising listings (and prices) in the spring are spot on. In Canada we are in real estate boom for past 11 months and it is getting a bit frothy — like gum where the bubble is too big and is about to explode all over your face.
Across British Columbia we already see a surge this first week in Feb. Today’s press release from Canadian R.E. Assoc. confirms they expect a bigger bulge than ever with resale home listings to surge 13.3% this year. With the doubling and even tripling of construction permits in January new home developers smell a good year as well. paul@propertyplace.ca
We were right on about rising interest rates…in case you missed it the Fed raised the discount rate yesterday. More increases expected…