Real Estate Predictions for 2010
As 2010 reaches the end of its first quarter, some predictions can be made about the real estate sector for the year. Most markets across the nation may have bottomed up for home prices to change very much in 2010. The first prediction is the slight increase in home prices in some US cities where the demand remains strong. In the cities where foreclosures are high, home prices may drop in 2010 though the worst case scenario is definitely over.
Till date, the Federal Reserve has been maintaining funds rate at 0 to 0.25%. In no time, this figure is bound to increase. The interest rates will increase when the Federal government ceases purchase of mortgage-backed securities. Those homeowners with equities will see an attractive interest rate. It is also unlikely that current homeowners will seek mortgage refinancing in 2010, causing this figure to drop.
In 2010, home owners who require a loan should have a FICO score that is above 720. These borrowers will be assured favorable terms and conditions for their loans and attractive interest rates. Borrowers whose FICO falls below 620 will not be granted any form of loan. Unlike previous years, underwriters will make stringent checks on loan applications. Borrowers’ assets will be analyzed and marital status checked when granting approval for loans. Underwriters will have the authority to reject loan application even at the eleventh hour if the application does not fulfill the conditions laid out. There will be more loan review appraisals as well.
The current state of unemployment will cause more short sales. Unemployment will cause more homeowners to opt for short sale so as to cope with day to day living. With layoffs, inability to find new jobs and reduced working hours, homeowners may not be able to make mortgage payments. Short sales will allow them to live a modest if not comfortable lifestyle.
Banks may decide to sell bank-owned homes more easily by fixing up the homes and making them more attractive for sale. This will enable the banks to maximize returns on investment. The sixth prediction is that banks would be made to be accountable for short sales that take place. This may cause the banks to disclose how much they will accept before the homeowner is allowed to list his home as a short sale.
The last prediction is that home owners may choose not sell their existing homes and this may in turn lead to a soft move-up market. Homeowners who have equities may wait for prices to increase before deciding to sell. Also, interest rates may increase causing potential move-up buyers to feel hesitant to invest. The marketplace will then have to target first time home buyers.
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