Below you will find my predictions from a January 7, 2010 blog post and my comments on each of those predictions as of August 24, 2010:
- Foreclosures will continue to come on the market and many will be scooped up quickly with multiple offers.
Correct! This has been the case so far this year, though this was certainly the easiest prediction I made – the months supply of foreclosures is still very low – 2.8 months currently – but has ticked up a little in the last few months. Unless we see 4+ months supply though we’re still likely to encounter many foreclosures with multiple offers. - The “next wave” of foreclosures won’t show up till AT LEAST July – and likely later than that since there has been no uptick in sheriff sales yet.
Correct! HousingLink’s data shows foreclosures are increasing in numbers in the last few months but there is no huge wave of foreclosures yet in view – the activity is elevated from 2009 levels but not yet at 2008 levels. We may see 2010 end with the highest number of sheriff sales on record but it won’t be that much higher than 2008′s. New bank owned (REO) properties hitting the MLS are still down 10% versus last year at this time but we’ll see that number tick up some as the sheriff sales from the 1st half of the year get listed for sale in the 2nd half.
- Short sales will also continue coming on the market but we’ll see more of them successfully close. Some banks will learn how to get short sales done quickly but some will still take months to even reply.
Correct! New short sale listings have largely flattened out. Short sales are a larger percentage of our sales each month than they were a year ago – depending on the month approximately 1 in 8 closed sales is a short sale. Some banks are responding a little quicker but it is still taking 3-5 months for many to respond. - Mortgage rates will be in the 5% – 6%, with rates climbing as the year goes on.
Wrong! I’m thrilled I was wrong on this one – interest rates have actually been sinking and I’ve seen some quotes for 30yr fixed rate mortgages in the 4.25% range in the last month!
- Mortgage underwriting standards will continue to tighten, meaning soon you will need to go through one of those airport naked-cam scanners to get approved for a loan, and then need to have your whole family go through one for a 2nd screening 2 days before closing.
1/2 Correct: While the Minneapolis/St. Paul International Airport is in the process of rolling out the full-body scanners, luckily lenders have not. Lending guidelines have softened a little on the higher-end – down payment requirements are a little lower and interest rates on jumbo loans have definitely improved. Lending rules in general have continued to tighten though – and the FHA mortgage product in particular – has gone through several changes. - Median sales prices will remain flat or tick up slightly - foreclosure prices are at their bottom but short sales and traditional sellers will likely drop a little further but higher-priced homes will be selling in greater numbers, pushing the Median up.
Correct! The tax credit expiration has skewed all these numbers for a few months but in general this trend is right. Take a look at The Thing for your own take on house prices. - The $1M+ housing market will still be very slow and the $500k-$1M will only improve slightly – since jumbo mortgages are still tough to get these houses have fewer potential buyers.
Correct: The higher ends of the market are starting to loosen up some with the improved lending options I mentioned above – inventory in the higher price points has fallen and the $500k+ year over year sales activity is relatively flat, which is better than some of the lower price points.
- Total inventory on the market is likely to continue its 2009 fall (20% in 2009) – dropping to numbers we haven’t seen since 2005.
Wrong! We were on the right track with this till the tax credit expired and now we are adding inventory at a healthy clip. The good news is it isn’t more sellers listing properties that’s the problem – it is that fewer buyers are buying. Much of this is likely attributable to the tax credit expiration but we are not sure how much.
Based on my own scoring of my predictions, I stand at 5.5 out of 8 correct, which I don’t consider too bad considering how unpredictable this market has been so far this year.
What do you think about my predictions? What do you see happening in the housing market?
