As many analysts predicted, the foreclosure trend that began in 2008 worsened sharply in 2009. Despite substantial government bailout, 2009 brought with it some of the highest residential foreclosure rates in history. While existing home prices followed foreclosures and fell dramatically, sales did bounce back slightly, due, in part, to the first time home buyer tax credit. Leveraging the tax credit incentive, builders lowered prices to offload excess inventory which helped new home sales to improve.
So, what can we expect in 2010? Here’s a recap of some of the agreed-upon predictions:
- The decline of the residential housing market isn’t over. It will probably dip again mid-year before entering into a true recovery in the second half of 2010.
- Government incentive and assistance programs scheduled to end in the spring will slow home sales.
- Rising foreclosures, linked closely to high unemployment, will result in excess inventory and will continue to negatively influence home prices.
- 30-year fixed mortgage rates will begin to rise from historic lows and level off in the 6 percent range.
- Low vacancy, rock bottom rent, and high default rates will continue to plague commercial real estate for the foreseeable future.
With such gloomy predictions, it’s important to keep in mind that trends aside, the real estate market is still alive. People are still selling, and people are still buying. If you are in a position to take advantage of this buyer’s market, consult a local realtor to discuss your strategic options.
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