How Will The Real Estate Market Fare In 2010/2011?
Many homeowners are looking at the current real estate market and wondering how much worse it will become before it actually starts to improve. Given the fact that the real estate market has continued to decline since 2008, it is little wonder that consumers are so freaked out.
Default rates ( foreclosures) rose significantly while the prices of homes fell sharply. In addition, the rate of home ownership began to drop as more first-time homeowners were frozen out of the market as the loan money went away. To make matters worse, as foreclosures increased – mortgage brokerages began to file for bankruptcy.
If you’re like many consumers you may be wondering how much worse it will become.
Recent statistics indicate that housing prices will likely drop further before they begin to improve. One of the reasons for this is the fact that credit is still experiencing difficulties while interest rates have not improved either. Many experts believe that commercial real estate will continue to soften throughout 2010/2011 including shopping centers, offices and apartment buildings. Slower economic expansion could result in higher rates, thus triggering the continued softening of the commercial real estate market.
Many feel that the relief from the real estate market will not come soon at all. The inventory of homes currently on the market has continued to grow since 2008, and this inventory will need to be sold before stability can occur for the overall market. According to the U.S. Census Bureau the rate of homes in the United States there were vacant and for sale during the last months of 2007 was higher than it had been since 1965.
It is expected that the demand for housing will remain lower as well, thus impacting housing prices. High risk buyers who would have been able to qualify for subprime loans in the past have now found out that they are locked out of the market. Even buyers who are able to qualify with great credit scores but who do not have a large amount for down payments ( more than 5%) may also discover it remains difficult to become approved for mortgage loans.
While residential markets throughout the United States have been hit hard, Florida is in the “Top 5″ worse market. Part of the reason for this is the fact that tens of thousands of condominiums that were built in 2008/2009 still haven’t sold.
California has also suffered as buyers who struggled to take out risky loans in order to purchase homes with soaring property values in the past few years discover they are no longer able to meet their housing payments. In many cases, selling those homes now is difficult as property values drop and mortgage payments rise.
So when will this spiral down stop? No one knows.