Real Estate Market Forecast

What Can We Expect in 2010?

Feeling a little beat up coming out of 2009?  You’re not alone.  Now as we look forward into another year, anxiety and maybe a little fear seems to captivate the minds of many.

Just over a year ago we witnessed the near collapse of the U.S. financial markets.  While jobless figures have rocked our world, unemployment is likely to rise going into 2010.  Due to the fact that government policy is uncertain, many firms are holding off from hiring until the future gets clearer.  But don’t conclude that’s all.  As the government stimulus programs wind down, we could experience another dip.

Compounding the situation is the massive amounts of household debt Americans are carrying.  The levels are unprecedented and potentially lethal.  What, then, will this mean for the housing markets?

Inventory of new homes is at its lowest level in 17 years.  This is due largely to the steady stream of foreclosures hitting the market.   Add to that, the extension of the government’s 1st time home buyer tax credit till April, 2010.  This will stimulate more action on the lower-end houses.

However, according to Cameron Findlay, chief economist at LendingTree, “Delinquencies are a precursor to foreclosures.”  Then he added, “We’re not seeing any decreases in delinquencies, which is very concerning.”  A wave of foreclosures would only add to the inventory in residential real estate.

As I have stated for some time, without the federal stimulus money and earnest cooperation from the lenders, it is likely that we will see a continued drop in demand while the supply rises.  I also see this happening at a higher rate in the luxury home arena.  Many of this nation’s rich will opt out of their mortgages in 2010 making the luxury home market the best in our lifetime.

One innovative young company has created what they call their “Homeownership Preservation” program suited to these types of families who wish to short sell their homes and start afresh.  In a future article I will comment on some of the features of this brilliant strategy.  Till then, I’ll have my “ear to the ground” and keep you posted.

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