A Look at the Past and a Look at the Future
This time last year we predicted that 2009 would end a lot better than it began. We were right, though it wasn’t a great accomplishment to be right considering how low the housing market, stock market, and overall economy had sunk during the latter half of 2008. As we’ve stated repeatedly over the past year, a low base and a dour outlook provide an excellent buying opportunity, so we weren’t surprised when buyers stepped forward to exploit the opportunities.
Looking ahead to 2010, we see continued improvement in home sales and home prices. In fact, we wouldn’t be surprised if the market turns to a sellers’ market from a buyers’ market by year’s end. We are almost certain that will be the case if we see a two to three percentage point drop in the unemployment rate. Low mortgage rates and income tax credits are contributing factors in stabilizing the market, to be sure, but no factor is more important than employment in not only maintaining stability but stimulating activity.
We also think 2009 will mark the end of the sub-five-percent 30-year fixed-rate mortgage for the foreseeable future. Many economists predict rates quoted in the low sixes will be the norm for 2010. We agree. But that’s not bad news. The higher rates will likely be accompanied by a more robust economy, with more jobs and greater consumer demand. We also think that higher rates will be accompanied with more relaxed underwriting standards, as banks and other lenders become less risk adverse.
In the meantime, mortgage rates are still very good, as are housing prices, which is why we continue to urge borrowers to refinance and buyers to qualify for a loan and buy. It’s worth remembering that today’s deals in both the mortgage and housing markets are the anomaly not the norm, and that the norm can return faster than many of us expect.
Visit my website at www.deanrizzi.com
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Dean,
You post was interesting that you reminded us of your thoughts this time last year and how they played out. Good Job!
Those who can qualify for current financing and the attractive rates should not wait and those who are close but not there have something to look forward to.
Brian