2010 Predictions
Happy New Year!
Home prices will be determined by what buyers earn as opposed to what they can get a loan for. This ratio has already taken a massive correction- which is good.
Home prices- the macro number will indicate that prices are stable or are increasing. This will be the macro "median" price. On a closer inspection I think the numbers will show that homes that are now listed for $500k will be reduced to $399k and below. Homes that are now listed at $350k will drop in price to well below the $300k level. All of these sales will "increase" the median price but the individual sellers and owners will see these numbers as dramatic value depreciation.
The number of real estate agents will continue to decrease. As renewal fees and subscriptions come due, the cost benefit analysis will lead agents to let their license expire and move on to other, less expensive, income searches.
Brokers, lawyers and title companies will continue to push for more short sales. The reason for this is purely economic and has nothing to do with concerns for the market or the economy as a whole. Brokers want more short sales because they can then have 400 agents trying to get listings as opposed to 40 agents with the REO listing accounts. Lawyers want them because they are a legal goldmine and title companies want them if they do not have a REO account from a major defaulted note holder.
The economic recovery will be prolonged by this "short sale fixation." While foreclosure sounds bad, it is actually a good thing for the market. The results are fast and quantifiable. They are generally without prejudice- meaning there is not a "hardship letter" detailing why a person needs relief. Heck, we all need relief but it comes down to whether or not we can pay the bills. If you don't pay your cable bill- they turn off your cable; don't have the money for a Ferrari, you buy a Ford. Utilities are public and have other guidelines- at times. We do not want to have 2,000 home public housing areas scattered across the country.
There is still pain to had but a clean sharp knife is generally faster than a dull, rusty blade that has uncertain results.
ts
Home prices will be determined by what buyers earn as opposed to what they can get a loan for. This ratio has already taken a massive correction- which is good.
Home prices- the macro number will indicate that prices are stable or are increasing. This will be the macro "median" price. On a closer inspection I think the numbers will show that homes that are now listed for $500k will be reduced to $399k and below. Homes that are now listed at $350k will drop in price to well below the $300k level. All of these sales will "increase" the median price but the individual sellers and owners will see these numbers as dramatic value depreciation.
The number of real estate agents will continue to decrease. As renewal fees and subscriptions come due, the cost benefit analysis will lead agents to let their license expire and move on to other, less expensive, income searches.
Brokers, lawyers and title companies will continue to push for more short sales. The reason for this is purely economic and has nothing to do with concerns for the market or the economy as a whole. Brokers want more short sales because they can then have 400 agents trying to get listings as opposed to 40 agents with the REO listing accounts. Lawyers want them because they are a legal goldmine and title companies want them if they do not have a REO account from a major defaulted note holder.
The economic recovery will be prolonged by this "short sale fixation." While foreclosure sounds bad, it is actually a good thing for the market. The results are fast and quantifiable. They are generally without prejudice- meaning there is not a "hardship letter" detailing why a person needs relief. Heck, we all need relief but it comes down to whether or not we can pay the bills. If you don't pay your cable bill- they turn off your cable; don't have the money for a Ferrari, you buy a Ford. Utilities are public and have other guidelines- at times. We do not want to have 2,000 home public housing areas scattered across the country.
There is still pain to had but a clean sharp knife is generally faster than a dull, rusty blade that has uncertain results.
ts
posted by Terry Schonert at 9:50 AM
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