A Look At Real Estate in 2010

Happy 2010!  Everyone is predicting what Real Estate will be like for 2010.

Let’s start off with the fact that no one really knows what 2010 will look like, otherwise,  they would be making millions.   Some of us may be right on with some of our ideas and others will be way off.

What we can do is predict based on the previous year and years what we think might happen.  Any prediction here is based on the Sacramento real estate market only as I have not studied the entire nation.

Since 2009 was a year of  foreclosed bank owned homes and Short Sales it is likely we will see more of the same. With one exception, I think.  In my opinion, the banks will not be showering the market with their inventory of foreclosed properties. It has taken awhile, 3 years to be exact, but the banks have learned a little something about real estate.

Supply and Demand!

The banks are as stupid as a fox…they aren’t about to let the flood gates open and release all of the “shadow” inventory.  In 2010,  I believe the banks will slowly ease their “shadow inventory” into the real estate market keeping those multiple offers coming and prices eking up.  It will depend how educated the home buyers are and what they are willing to pay as to where prices head.  REMEMBER…

Home buyers drive the price

Here’s a little graph of the Sacramento foreclosed bank owned homes since 2007.  It’s not that there were fewer homeowners who lost their homes but that the banks got smarter.

This is the Sacramento foreclosed bank owned homes for sale, sold and in Pending Sale since 2007 through 2009.  Think the banks learned something?  Think the banks will hit the market with their “shadow inventory”?   Think again!

Here’s a kicker,  the Federal Reserve is to stop the $1.25 trillion program by the end of March.  If this does indeed happen, mortgage interest rates will rise which will definitely effect the home buyer.  Some home buyers will be unable to buy.  Do I think the government wants to see this happen?  NOPE.

Just like the home buyer tax credit extension, my predictions is interest rates will not rise for long.  It would be like the government cutting off their nose.

You ask about the home buyer tax credit being extended yet again?  Since 51%  of the homes sold nationwide did so for the home buyer tax credit, it would be insane for Congress not to pass this again as long as the government wants to manipulate the economy.

Tighter FHA (Federal Housing Administration) rulings about downpayments…hmmm  In a weakened state of the economy and job loss, it doesn’t make a lot of sense to raise the down payment from 3.5% to 5% for FHA home buyers.  CNN Money asks if the home buyer’s cost should rise due to FHA reserve funds slipping.

Well everyone has their take on the economy, real estate and the stock market.  There are the doom sayers and those who are eloquently optimistic.  Some even have another stock market crash headed our way and real estate not having reached the bottom yet.

No one really knows and by the time we all know for sure, it will have already happened. 

Commercial will continue to bleed and I believe we will see more stripmalls vacancies as the year progresses.  It’s hard for new businesses to get started with banks not loaning money but hopefully, we will see a change in the lending to new businesses.

Due to the government’s intervention, the pain and the blood will continue…it’s been a very slow death but the patient is rallying.  Real Estate is making a come back!

Happy 2010, chose wisely, don’t over pay, do your due diligence and treat your home with respect and dignity and you’ll win in the end that is my HOPE  for 2010 .