Real Estate Outlook:2011

Sales MeetingDecember 29, 2010

Video

Optimism Is Fading in U.S. Housing MarketFeaturing Robert Shiller

Economics Professor at Yale University, andco-creator of the S&P/Case-Shiller Index of

Property Values

Housing prices likely to fall in 2011CNN Money Team

Look Back at 2010

• 1st time Home Buyer tax credit• Historic Affordability Levels– Low Mortgage Rates– Rising Household Incomes

• Rising Foreclosure Rates– Concerns over proper foreclosure procedures

• Attack on homeownership• Low Consumer Confidence• For Sale by Owner’s Decline to 11% of the market

(Down from 13% in 2009)

November Foreclosures in Douglas County

realtytrac.com

Home Sales Price Gains

realtytrac.com

www.realtor.org

www.trulia.com

5 Reasons to Buy a Home in 2011

• Mortgage rates will stay low. • Tax cuts could help.• Americans want to be home owners. – Recent Fannie Mae surveys show that Americans

still believe a home is a safe and desirable investment.

• Builders are about to begin building. • Homes are shrinking and becoming more

affordable.

Recovery Mode• Trend will be a rise in home sale activity• Lawrence Yun with NAR:

– Est 5.2 million existing-home sales in 2011, up from 4.8 million last year (0.09% increase)

– Home prices to rise about 1% this year on a national basis• Biggest Factors:

– Businesses Spending Money• Job Growth, Commercial Sales/Leases, etc.• Concerns: Health Care Reform, Wall Street• Business cash reserves have grown to the point where corporate

leaders have to start deploying their money to get the kinds of returns their investors want to see.

– Consumer Confidence• Will return with employment, stable home prices

Recovery ModeMajority of Americans Expect housing to recover after 2012

realtytrac.com

Commercial Predictions

Residential Predictions

• Prices & Mortgage Rates Stay Low or fall lower• Loan guidelines tighten up, and down payments

may rise.• Condo’s will become even more difficult to buy– Most lenders require that no more than 15% of HOA

members be 30 days or more behind on their dues– Conventional (non-FHA) loans require at least 25% of

the units be owner-occupied• Increase in conservative buying

Foreclosures

• The driving force behind price declines

• 2010:– About one-third of home

sales were Foreclosures– Average price discount

of 26% (RealtyTrac)

• More such sales are on the way, but estimates vary.

Low Price Factor

• Interest Rates @ Historically Low Levels• National Level:

– Median Home Prices down 30%

(From $239,000 @ peak in 2006, to $172,000 @ end of 2010)– High Volume of Foreclosures in market

• Yun of NAR expects foreclosed homes to account for 1/3 of sales in 2011

• "My best guess is that this year, people will be buying a lot of the foreclosed properties, but it will still take an additional one-and-a-half years to bring the inventory down to a more normal level."

Inventory

• Higher Inventory= Decline in Pricing

• Fate of Fannie and Freddie will be announced in January

• Will there be another home buyer tax credit?

Inflation

• Risks of entering a period of Japanese-style deflation– Expectation for continuing price drops keeps people from

spending• Biggest impact:

– First-time buyers: If interest rates rise along with inflation, home ownership will become increasingly out of reach.

• "Some inflation isn’t a bad thing, but high inflation isn’t optimal," Yun says. "So as long as inflation can be kept in check—and business and consumer confidence restored—look for a slow return to normalcy in the months ahead."

2011: Game Plan

• Another year of Buyers Market– Work on Expanding your role as buyers agent– Market more towards buyers and investors– Keep working with banks on REO’s– Become affluent in the world of short sales– Always provide sellers with CMA’s in order to list

at right price, or slightly underpriced• Keep Positive Attitude

Real Estate Technology in 2011

• Smart Phone Search:– Google Goggles– QR Codes– Real Estate Based App’s

• Social Media, Blogging and Video Stick Around

Good Luck in 2011!