3 Things To Know About Real Estate in 2010: Lisa Doyle’s Newsletter Volume XVII

  1. Prices to Bottom:  After more than 3 years of falling, Real Estate values have shown signs of stabilization in recent months.  This improvement will give way to a bottom in home prices, finally, in 2010, but not before some possible declines.  Some Real Estate forecasters are projecting home prices to hit bottom in the 3rd quarter of 2010.
  2. Mortgage Delinquencies Up:  Amid falling home prices and a poor labor market, roughly 1 in 7 mortgages was either past due or in foreclosure by the end of the 3rd quarter in 2009- the highest delinquency rate in the 37-year history of the Mortgage Bankers Association’s National Delinquency Survey.  Two factors are expected to drive delinquencies even higher next year.  First, nearly 1 in 4 homeowners currently owes more on their mortgage than their property is worth, which increases their odds of default.  And secondly, the national unemployment rate- which already stands at 10 %- will peak at about 10.5 % in the first quarter of 2010.  Additional job losses mean more borrowers won’t be able to pay their mortgage bills.
  3. Mortgage Rates to Rise:  Anyone who purchased a home in 2009 was presented with some extremely attractive mortgage rates.  Rates on 30-year, fixed mortgages fell to an average of 4.88 percent in Nov. 2009, down sharply from 6.09 a year earlier.  A key factor behind the plunge was a Federal Reserve program, first announced in Nov. of 2008, which purchased debt and mortgage-backed securities from Fannie Mae and Freddie Mac.  But the program is slated to expire at the end of the first quarter, and if private investors do not step up, fixed mortgage rates could jump.  The unwinding of this Fed program, the improving economy, and mounting concern over govt. deficits could push rates on 30-year, fixed mortgages to roughly 5.5% by mid-2010 and close to 6% by the end of the year.