As we jump headlong into 2010, I can’t help but look back on all the real estate industry has been through over the past year.
After three years of a declining real estate market, 2009 brought a much-needed break for the hard hit real estate sector.
Our local market benefited from bargain hunting in the entry-level segment, federal and state housing credits for first-time buyers and a gradual improvement in the overall economy.
By many indications, we may have seen the worst of the housing recession. But the question remains — what’s in store this year for the real estate market? Will housing prices rebound? Will the new extended and expanded tax credit be just what the doctor ordered? Will the luxury market recover similarly to the entry level?
I’ve gathered a few of my own frequently asked questions and will share with you my views on 2009 and what may be ahead for 2010.
How did the housing market fair in 2009?
Although it was a challenging year, it was a year of transition in many of our markets.
We bounced along a rough bottom but we did see some improvement as the year progressed. The second half of 2009 was when we finally saw a jumpstart, which seemed to stem from consumer confidence and perhaps buyers rushing to purchase before the tax credit deadline.
As we all know now, that deadline has been extended until next spring.
Do you think the extended and expanded tax credit will solidify our market recovery?
The tax credit is compelling and has had a positive effect on the market, particularly increasing activity in the lower-end segment.
But it probably won’t create a market-wide recovery by itself. We also need the move-up buyers to take part and understand that now may be the best time in recent history to step up to higher-priced homes, which have been marked down.
And a lot of the housing recovery will be based on consumer confidence and improvement in the employment outlook.
Do you think we’ve hit bottom?
I think in many communities we probably have hit bottom. We are seeing statistical evidence of it in the median sale price and in the number of homes sold.
Interestingly, the communities that may have hit bottom are not necessarily those that were hardest hit by foreclosures.
The communities that are strongest today are those that are clearly most desirable. When the market was red hot, people who couldn’t afford their first choice community had to settle for their second or third choices. But thanks to the lower prices and improving opportunities in today’s market, they are better able to buy into their first choice of neighborhoods.
What do you recommend to today’s homebuyer?
Buyers need to understand that the market is a little schizophrenic right now. It is probably the time to buy, but the market has been challenged.
You may see that in certain markets, we’ve had lower prices and decreasing numbers of available homes for sale.
The problem is that if you wait a year, you’re probably going to run up against a lot of challenges — increased interest rates, increased buyer demand and decreased housing inventory.
The combination of those factors is creating more urgency in the more desirable markets today.
What do you anticipate for real estate in 2010?
I predict that in 2010 the more desirable neighborhoods will see a modest increase in sales price and a decrease in the number of homes on the market.
We’ll likely see an overall stabilization in the marketplace and a slight increase of the average sales price of homes.
We probably won’t ever return to the sales levels of 2005 and 2006 because so many of those sales were artificially created. But, I believe we are now on the right path toward modest, sustainable growth.
Bob Bronswick is the president and chief operating officer of Coldwell Banker Residential Brokerage in Sacramento/Tahoe. For more information, contact Coldwell Banker at (916) 797-5413.
