5 Predictions for the Future of the 2010 Housing Market
5 Suits Speak 5 Different Perspectives
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When I went with Chris to NYC, the Big Apple, to attend Real Estate Connect sponsored by Inman News, it came as no surprise to me that that the leaders in the housing industry were all men and of course they were all wearing suits. Nice ones ! Very handsome. But what did take me by surprise was what these 5 men predicted for the future of the 2010 housing market. Below is a shot of the stage and our 5 featured speakers with Brad Inman leading the pack to the far right.
There they were. 5 glorious men in their corporate uniform, steeped in the minutia of their profession, being challenged to make 5 Predictions for the future of the 2010 Housing Market. The panel included Carter Murdoch (Bank of America), Sean O'Toole (CEO Foreclosureradar.com), Greg Rand (CEO Better Homes and Garden Real Estate), Nishu Sood (Research Analyst Deutsche Bank Securities) and Patrick Stone (Chairman of The Stone Group).
Their answers ranged from pessimism to conservative optimism. No one on this panel was doing cartwheels and spinning rainbows. I never saw one of them pull a crystal ball from their breast pocket though that would have been pretty funny. These 5 men spoke the truth as they saw it. In fact, their answers, though not earth shattering, will provide a simple and agreeable message for everyone including Buyers, Sellers, Investors and those who are "on the fence" or just plain old curious.
The Question: What is your Prediction for the Future of the 2010 Housing Market ?
The Predictions (prefaced and slightly dramatized by me)
Suit #1 The Alarmist- There is still too much risk in the housing market. The $8,000 tax credit is just not enough to solve our long term problems. We are in for an uphill climb once the tax credit is gone. Run for the hills!
Suit #2 The Realist- There is a "New Normal" in the mortgage industry. Suck it up, brush it off, and get used to it. Your going to need more money to buy a home. So stop spending like it is 1999, "plan accordingly", save your dollars now and plan for the future.
Suit #3 The Optimist- The vacancy rate of properties will continue to improve through 2010. Affordability of homes has improved and will continue to improve through the year. The investor market is booming now and will continue for those who have cash and want to hold and rent.
Suit #4 The Redundant - Properties will continue to have declining values in 2010. Banks will continue to hold back on foreclosures. More home loan modifications will continue to happen. In short, same stuff, different day.
Suit #5 The Obvious There was never a meltdown. It was just mass hysteria. The problem was predictable. What goes up must come down and what goes down will level off. Duh!
I have to say, panelist number 5 resonated with me most. What goes up must come down and what goes down must level off because that is the natural cycle to the Housing Market. We are moving toward a norm of sorts. That is something we lost over the last decade of excessive loans and inflated home prices. There was no normal. But now we are creating a "New Normal". The collapse of the housing market may well have been predictable as panelist #5 mentioned in his response. I guess hind site is always 20/20.
What are your thoughts or predictions for 2010 ?
Which answer did you agree or disagree with ?
Also, please see 5 Tips to a Better 2010 !
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I too like #5's comment. Although the boring #4 may be right!
Seriously, I'm on the fence on this one. It's not that I dont want to predict but if you really twist my arm, I'm going to say it's going to be more of 2009. With the tax credit still affecting the housing market, we will never be able to see the true intentions of the consumers. Although I've heard alot of agents/ lenders tell me the clients they served would have bought houses anyways. They are correct but yet I have ALOT of clients who now has a dateline in which they want to purchase a home by.
I've been asked if it would be extended AGAIN. Those who wanted it is hoping YES. I could go either way on this one. Personally, as long as we still have this picture, we cannot fully see the extent of what the real market would do.
Then, I assume that there will continue to be more procedures in place to help shape things better in the Mortgage industry. Are they going to be perfect? Nope, but I know they are giving their best shot at it. All I can say is that their intentions are good to begin with.
Here you have it.
I am a combination of Suit #2 The Realist & Suit #5 The Obvious.
Banks are going to want the buyers to have more skin in the game and that this market will start to level off in 2010.
None of them said anything earth shattering but let's face it the market over the years has gone through peaks and valleys. In the 1970's high interest rates (15% or more) hurt the housing market, in the 1980's the S&L crisis hurt the housing market, in the 1990's prices fell and there were plenty of short sales. The difference in the 2000's? More people bought homes with low interest rates and lax lending rules.
The price corrections were inevitable and know we have someone reporting everyday on the "fall of the housing" market. I wonder how much has all the negative publicity scared even more homeowners or potential homeonwers to bail or stay out of the market?
Christopher & Stephanie...This economy is about sustainability for 2010...I believe that we'll see higher peaks at times and lower valleys than anticipated. It's going to cause us to quit reacting from the personal and business standpoint. We're going to have to stand firm and continue deliberate steps of prudent business planning, marketing and adaptation, as well as allow our minds to soak in an oasis of optimism...Cherise
#5 The market was correcting itself seemed to be the answer ..although unemployment was still an issue new jobs are not being created......at least not enough or fast enough..
HELPFULHANNAH your friend in Philadelphia
The investor market will improve as they can either buy and rent it out or flip it because of new HUD rules. If they can extend the tax credit to investors, there may be more demand and less inventory of reos.
They are all practically wearing the same thing. Its like they are dressed for a funeral....which real estate may seem like lately lol
I wish they would have some down to hear people speak for once at real estate conferences. Cut the suit junk and be real.
Although they all have various points, I think it does boil down to this thing called money and when buyers dont have jobs, they cant buy a home. You can throw all the money at the buyers you can try but unless you either a) give them a free house (which that would make our jobs interesting for sure... "sure ill show you around looking at homes, handle all the paper work and how about a x% on the $0 sales price..sound fair? cool"
or b) create jobs so they can do this foreign term called "save" and then buy a house. 3.5% down is too little to invest in my opinion to get the keys to a home. 3,500 on every 100k is just too small.
edit for above post....since i cant edit it.... i meant to say "have some down to earth people"
I would say #5 with a little of the rest intertwined. But I am hoping for a more positive outlook! I think it also depends on the perspective that you are looking at the market in. Some people and agents are thriving while others are dying, sort of a survival of the fittest.
Sean,
You crack me up. So anti-establishment. Love it! But you know, underneath those tailored uniforms is an Old Navy T-shirt and Levis. A least, I'd like to think so.
I really think that you hit the nail... no jobs, no nothing.
So, how do we (realtors) help produce jobs? Many of us are just trying to keep their head's above water. I know for me and Chris we try to get as many leads as humanly possible to pass on to our team and to the office. It is important for us to help our folks keep their job and make room for new people and new jobs.
I appreciate your thoughtful comments.
Gita,
You are right. The big question for many is, will they extend the tax incentive. I think they wont.
LOLOL at your synopsis! I am so over the redundant and the obvious. yawn yawn yawn! Banks are throwing the homes on the market as quick as they foreclose. I do enough BPOs and see enough tax records to know this! Bankruptcies, loan mods and short sales are holding the inventory off from being foreclosed. Not for extreme long periods of time either.
Prices continue to decline in the Phoenix metro area. in some areas the Tax Assessor is predicting declines of 11 to 36% year over year!