2009 Trends & Conditions in a NUT SCHELL....
2010 Real Estate Conditions & Predictions....
A forum of experts came together with Inman News organization to discuss “2010 Real Estate Conditions, Predictions” and the challenges, concerns and opportunities that exist. Some of the topics that were discussed are as follows: the extended tax credit consequences; the low interest rate vs. inflation; tighter lender standards; competitive jumbo rates or the lack of; and “Shadow Inventory” concerns. Below I have summarized each topic in a paragraph in hopes of keeping it simple but informative.
Extended tax credit: This program has had a positive impact on motivating Buyers and Sellers. Statistics from NAR® and KAAR®, Knoxville local association, have confirmed an increase in traffic and written offers. However, this activity is predicted to subside after the expiration of the tax credit at the end of April no later than the end of June.
Low interest rate vs. inflation: In March Mr.Bernacke is expected to take the cap off low interest rates in an effort to adjust for the anticipated inflationary concerns and indicators that are beginning to crop up in the economy. How fast will the rates go up or inflation may hit is anybody’s guess.
Tighter lending standards: On April 2nd or there about there will be new, tighter restrictions from Lenders to Borrowers that include higher FICO scores, higher percentage of money down and PMI insurance are just a few of the things being considered in the legislation coming from Washington.
JUMBO Rates: These have been pretty much non existent since the financial collapse in the 4th quarter of 2008. This is evident by the lackluster performance of higher price point homes. Lenders have been reluctant to participate in the products because of the risk involved. In an effort to offer something to the public, it comes with very high FICO (in some cases 775 and higher) scores, more money down up front and hefty insurance coverage. Needless to say, personal credit history and credit scores have some impact in the decision process but more “CYA” considerations by the Lender have become priority.
Shadow inventory: Depending on who is giving the prediction, there are estimates of 1.7 to 3 million Foreclosures and Short Sales properties that are to be introduced to the real estate inventory across the country. These properties can be attributed to the result of the “Affordable Homes” program that was implemented in 2009 to assist home owners in modifying their ARM’s but fell short because only about 5% of the applicants actually were eligible; as well as the newly unemployed that can no longer pay their mortgage. This could result in further depreciation of property values due to saturated inventory levels.
In summary, there is factual information about things to come with predictions of how those facts will impact the outcome. I believe it boils down to two things when it comes to buying or selling real estate both have to do with motivation! It is about time & prioritizing by importance; or is it about money and what you have to get out of it?
Sincerely,
Karen