Of course you would.
Why? Because 2010 is shaping up to be an extremely important year with regard to the beginning of a steady recovery in the home building industry, amongst other important economic markers.
I read a piece on top home building industry trends for 2010 and thought that it made pretty good sense with the way that the economy is performing, the instability of the job market, attitudes and actions of the majority of banks, and the amount of foreclosures and short sales going on in the home building industry.
2010 still holds great news for first-time home buyers with the extended and expanded tax breaks allowed by the Fed.
If only this were going on when we bought our first home over 20 years ago. There was a recession going on then as well, but the home loan rates were terrible. Our initial home loan rate was 10.5%!! We’ve refinanced a couple of times since then, though, as rates have dropped over the years.
Real Estate Trends in the Home Building Industry
I’ve added tons of useful links (plus my 2¢ worth) to give you the information you need to take action.
#1 It Will Continue To Be A Buyer’s Market in 2010. Sellers… Not So Much
A LARGE Inventory of Homes + Low, Low Home Loan Interest Rates = Buyer’s Market
If you are selling your home, your advantage over all of the foreclosures in your area is a move-in ready home. Simply stated, have it in tip-top condition and give it some curb appeal to make your home stand out from the other homes in your market and price it accordingly.
Drive around and see the homes that are for sale in your area. Know where you stand and what you need to do for 2010.
#2 More Home Buyers Are Entering The Market
Why? Because it has a lot to do with the Home Buyer Extended Tax Credit. Basically, Congress passed legislation stating the following:
- Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
- Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.
This means that hundreds of thousands (hopefully millions) of people who are still not certain whether of or not to take the plunge and be a homeowner for the first time will decide to go for it.
Here are some important FAQs about the First Time Home Buyer’s Credit.
#3 More Foreclosures Are On The Way
We’re not out of the woods yet. There are 3 factors that play a large role in predicting this fact:
- U.S. Unemployment Rates – We’re hovering right around 10% nationwide for month-ending November. Construction employment fell by 27,000 jobs in November. The good news (if you can call it that) is that it was concentrated among non-residential specialty trade contractors. (Source)
- A huge number of homes that are already in the foreclosure process with more to come.
- Adjustable Rate Mortgages (ARMs) are scheduled to reset next year. Take a look at the graph depicting the ARM Reset Schedule. Yikes!
Here are some tools to help you avoid foreclosure.
#4 Home Prices Are Beginning To Stabilize
Standard & Poor’s/Case-Shiller Home Price Index 20-City Composite, the leading measure of U.S. home prices, “shows that the U.S. National Home Price Index improved in the third quarter of 2009, posting its second consecutive increase and further improvement in its annual rate of return.” (Source)
The National Association of Realtors (NAR) reports similar findings.
Recovery will be regional and slow to return. That’s how I read it.
#5 Getting A Home Loan Won’t Be Easy
Banks are under more scrutiny than ever before by the Fed. Therefore, securing a home loan will be much tougher. Get your credit reports together from the three main credit reporting agencies (Experian, TransUnion and Equifax) and go through them with a fine tooth comb and fix what you can.
Pay down as much outstanding debt as possible and work on improving your credit score (FICO). Then go and apply for your loan. Get your ducks in a row and have a nice chunk of cash in the bank for your down payment.
The 3 credit reporting agencies have set up a central website for you to obtain all 3 reports at once. The amended Fair Credit Reporting Act permits consumers to request a free copy of their credit report once every 12 months from each of the three major credit reporting agencies.
Get your FREE annual credit report. This is not an ad. I promise.
You can also obtain your free annual credit reports by calling 1-877-322-8228. You may also get your annual credit report via snail mail. Download the Annual Credit Report Request Form, complete it and mail it to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
- Obtain your FICO score for a fee of $15.95. It’s not available for free.
- How to Dispute Credit Report Errors
#6 Mortgage Rates Are Rising (Say It Isn’t So…)
The Fed bought huge amounts of mortgage-backed securities in 2009, which kept mortgage rates at historic lows.
This practice is scheduled to cease in March 2010, with the result being a rate hike of around 1%.
The point is, refinance now if you’re planning to stay put in your current home for the next few years, or take advantage of the lowest interest rates in the Feds history by buying a home now.
Here are the Fed’s current Discount Interest Rates.
#7 The Home Building Construction Industry Is Getting Mixed Signals
The highly anticipated and respected McGraw-Hill Construction Outlook 2010 Report is predicting an 11% increase in home building construction starts in 2010.
With the recession winding down and the support of the federal stimulus bill in place, recovery seems to be on the way.
It might have a tough time, though, with tight lending practices instituted by banks (with the Fed looking over their shoulder) and the fiscal condition of state and local governments.
The McGraw-Hill Report covers “detailed analysis about what lies ahead for the residential, commercial, institutional, manufacturing, and public works and utilities sectors, by region and nationally.”
#8 HVCC Appraisal Rules Are In Place
The Home Valuation Code of Conduct was enacted in May 2009.
“The Home Valuation Code of Conduct (the Code) is the result of a joint agreement between Freddie Mac, the Federal Housing Finance Agency (FHFA), and the New York State Attorney General to enhance the independence and accuracy of the appraisal process, and provide added protections for home buyers, mortgage investors and the housing market.” – Source
This is a good thing. It keeps everyone honest and in check.
Too bad it wasn’t enacted a decade ago when the housing bubble was just beginning to grow. We wouldn’t be in the mess we’re in now.
- HVCC Fact Sheet
- Home Value Code of Conduct
- HVCC FAQ
- Appraiser Licensing and Certification Board Web Sites and E-mail Addresses listed by state.
#9 (Hopefully) Smoother Short Sales Are On The Horizon
Short sales have not necessarily been buyer, or seller friendly. Apparently, there has been a lot of frustration with the months of waiting with no sale taking place in the end for a multitude of reasons.
Now lenders and real estate pros are working together to make this a much more productive process to increase positive results for a win-win-win situation.
- Here are the basics on short sales
- Read up on the Home Affordable Foreclosure Alternatives Program (HAFA). HAFA provides incentives in connection with a short sale or a deed-in-lieu of foreclosure (DIL) used to avoid foreclosure on a loan eligible for modification under the Home Affordable Modification Program (HAMP).
#10 You’ve Got To Have Cash, Cash, Cash
If you’ve got your eye on a short sale or foreclosure, be prepared to be outbid by investors.
Why? Because investors have cash on hand, and banks like cash when they have a slew of foreclosed houses in their inventory that they want to move off their books.
Banks might even take a lower cash bid over a higher “consumer” bid with a loan involved.
Why? Because there’s no hassle involved. It moves excess inventory quickly without all of the loan paperwork to deal with.