2010 Real Estate Forecast

Feb 3rd, 2010 | By | Category: Market Update

2010 Real Estate Forecast | Rancho Sahuarita | Green Valley | Quail Creek | The Sahuarita ConnectionLike most of you, I wish the real estate market was spiking back to the prices of 2005 -2006. I own enough real estate to REALLY wish that was happening. Pricing has always been about supply and demand. The current housing market is no different. As we head into 2010, I am continually aiming to decipher all the data that is being reported regarding the housing industry. My main goal is to try to bring clarity to a market that is full of confusion. You may have noticed real estate related head-

lines in the media lately that contradict themselves. It’s not unusual to see a headline proclaiming the housing market is improving one day and a headline reporting a rise in mortgage defaults or a drop in median prices of homes the very next day.

As I track the data that is available, here are some predictions for 2010:

  • Government incentives for home buyers will end. The end of Government programs that have been stimulating housing (the home buyer tax credit and the Fed’s Fannie Freddie mortgage-backed securities purchase program) will result in a slowdown in demand as we head into Spring.
  • Foreclosure & Short Sale inventory will be a lot higher than some predict. Inventory should increase as homes the banks are holding onto or that are still in the foreclosure process hit the market. Banks simply have not been able to keep up with the high number of mortgage defaults. In addition, many of the 5 yr ARM mortgages that were issued in 2005 are going to be resetting, resulting in higher payments that some homeowners will not be able to make. Rising foreclosures put additional downward pressure on home prices. (See page 7 for more about short sales.)
  • Interest rates will rise. Unless the government decides to extend its Fannie-Freddie Mortgage-Backed Securities purchase program or come up with another plan to manipulate credit markets, mortgage rates will rise steadily.

If you are planning to buy a house, now is really a good time to buy. Prices are low, the $8,000 credit for first-time homebuyers is still available, as is the $6,500 credit for repeat buyers, so long as there’s a binding sales contract by the end of April. These tax breaks, once expired, aren’t likely to be brought back. Mortgage rates are still low but they’re rising and some forecasters see them topping 6% by the end of the year. Potential sellers should take advantage of the buyers who are out there trying to purchase in time to get the tax credit and lower interest rates. If you are planning to sell your house in 2010, you should do it sooner rather than later. In addition to the factors listed above , the weak job market and the economy in general will prevent home values from appreciating for awhile and may even lead to more declines in value. The good news for Sahuarita homeowners is that our community continues to grow and to attract buyers and commercial businesses. While sellers may not be happy with current home values, the potential for appreciation is still strong as our town and infrastructure continue to improve. The long term outlook is good and our future as a town is exciting!

~Mary Benavides~
The Home Team, Long Realty