Monday, November 22, 2010

My Real Estate Predictions

 Eva Kröcher (Eva K.)
Many experts have stated their predictions of where they see the real estate market going.  These predictions have run the gamut.  Some said that interest rates would increase in the second half of 2010 while others said that housing prices would steadily increase.  And still others predicted that just the opposite would occur.  So as a real estate professional actually practicing in the Atlanta market, I want to offer my predictions. 

1. Foreclosures will increase over the next 12-18 months.  With the increase of foreclosures, the market will be flooded with new listings.

2. Short sales will decrease drastically if not disappear altogether.  Mortgage companies will not find it advantageous to expend the time and effort to process short sales.  It will be more economical for them to simply foreclose on the property and move ahead.  This also means that the mortgage companies are going to lay off most of their short sale negotiators.  I don't like to see people lose their jobs, but many of these "negotiators" were not skilled or trained to conduct this work anyway.

3. Loan modifications will not be considered in cases where the modifications are actually needed.  However, they will be offered and approved for those whose accounts are current and paid on time.

4. Housing values will not increase until the end of 2012.  This is where appraisal reports will start to reflect values closer to, equal to and in many cases exceeding the purchase price in the purchase and sale agreement.

5. We will see what I am calling "false projecting" beginning as early as February 2011.  False projecting is where mortgage companies place foreclosed properties on the market at higher prices than the market can bear.  Ultimately the mortgage companies hope to stabilize the real estate market by increasing the prices.  Even if a buyer comes along and makes a full price offer which in theory should drive the value up, this is all false because the appraised value will still be generated from recent sales activity. 

6. We will see new construction begin again in 2011.  however, we will not see all of the bells and whistles from before.  Builders will build sound housing stock with standard finishes.  Gone are the days of granite countertops, travertine back splashes, stainless steel appliances, hardwood floors, plush carpet, jacuzzi tubs and so on.  Now we will see a lot put into energy efficiency and a focus on making sure that the product is built to last.  In regards to new construction and the appraisal issue Pat Curry wrote a great article, 10 Ways to Beat Low Appraisals

This may all sound like doom and gloom.  But it's not.  As I stated in an earlier post, this is absolutely the best time to purchase real estate.  Prices will never be this low again.  What we witnessed a few years ago with high prices, steady appreciation and the easiest financing process is gone.  I don't think we will ever see the real estate market operate like that again.  We are now on the other end of the spectrum with extremely low prices and interest rates.

It will take some time.  Be assured the real estate market will recover and even out.  This will not happen as a result of "false projecting," but as a result of slow and steady increases in sold prices. 

The Complete Guide to Locating, Negotiating, and Buying Real Estate Foreclosures: What Smart Investors Need to Know - Explained Simply

No comments:

Post a Comment

Live * Love * Laugh