As we approach the end of 2009, I can’t help but look back on all the real estate industry has been through this past year. After three years of a declining real estate market, 2009 brought a much needed break for the hard hit real estate sector. Driven largely in part by the economic stimulus that helped the housing market emerge from the recession, it leaves many of us wondering what is next for real estate. Will housing prices rebound? Will the new extended and expanded tax credit be just what the doctor ordered? Will the luxury market recover similarly to the en¬try level? In fact, these are just a few of the questions I’ve been asked lately. So, I thought I’d gather a few of my own FAQs and share with you my views on 2009 and what may be ahead for 2010.
• How did the housing market fair in 2009? Although it was a challenging year, it was a year of transi¬tion in many of our markets. We bounced along a rough bottom but at the same time, we are now prepared for a modest and consistent improvement. The second half of 2009 was when we finally saw a jumpstart, which seemed to stem from consumer confidence. Does a buyer feel confident in his/her employment and finances? If so, then buying a home is typically a good option.
• Do you think the extended and expanded tax credit will solidify our market recovery? We are certainly recognizing that the tax credit is compelling if a potential buyer is confident in his/her finances or future employ¬ment, and it has helped to increase activity in the lower end market. But it probably won’t create a market-wide recovery. For that, we need to remind move-up buyers that now may be the best time in our history to step up to the higher priced homes.
• Do you think we’ve hit bottom? I think in many communities we probably have hit bottom. We are seeing statistical evidence of it in the average sale price and in the number of homes sold. Interestingly, the communities that may have hit bottom are not necessarily those that were hardest hit by foreclosures. The communities that are strongest today are those that are clearly most desirable. When the market gets soft, the people who previously couldn’t afford their first choice community had to settle for their second or third choices. But thanks to the opportunities in today’s market, they are better able to buy into their first choice neighborhoods.
• What do you recommend to today’s home buyer? Buyers need to understand that the market is a little schizophrenic right now. It is probably the time to buy, but the market has been challenged. You may see that in certain markets, we’ve had lower prices and decreasing numbers of available homes for sale. The problem is that if you wait a year, you’re probably going to run up against a lot of challenges: increased interest rates, increased buyer demand and decreased housing inventory. The combination of those factors is creating more urgency in the more desirable markets today.
• What do you anticipate for real estate in 2010? I predict that in 2010 the more desir¬able neighborhoods will see a modest increase in sales price and a decrease in the number of homes on the market. We’ll likely see an overall stabilization in the marketplace and a slight increase of the average sales price of homes. We probably won’t ever return to the sales levels of 2005 and 2006 because so many of those sales were artificially cre¬ated. But, I believe we are now on the right path toward modest, sustainable growth.
What a ride 2009 has been. And although there still could be a few surprises ahead, I for one am glad to see many of our challenges of this past year behind us. I truly believe that we are collectively emerging from this difficult market with a renewed awareness of the real estate industry, its affects on our nation’s financial stability and how important it is to learn from our mistakes. We have weathered the storm and seem well positioned to reap the benefits of an evolving market.
Posts
