Okay, here we are approaching the end of 2009 and approaching a new year of hope in regards to the housing market. But do we have good news to declare for 2010? Here is what I do know and what I forecast to happen. First, I will discuss national predictions, then here locally in Maryland.
As of Sept 09, the country declared 3 million in default. True, some of these were first notice default, yet we have so much more now to consider. We have not yet bottomed out. Based on current predictions, June, July, and August of 2010 is when we will bottom out. We are just approaching the end of the recession-December, and there are many more foreclosures that still need to be released into the market. So, excluding government intervention, our housing market will be saturated with inventory. Now, if the government does intervene, we may see loan modifications. For FHA loans we may see raising the acceptable credit score of 620 up to around 660. So, credit margins will be harder for buyers. Fannie Mae may be modifying some guidelines beginning Nov 1st. Perhaps they will place moratorium on releasing foreclosure inventory into the market; which in reality just postpones the inevitable. We shall see how all this plays out.
Now, Maryland real estate has fared better than most due to the abundance of government jobs which have kept unemployment low. However, the state is not immune to the foreclosure epidemic, and many of the communities face a long climb to recover from damage done by the housing crash. The prices of homes have fallen more than two years in most of Baltimore, which has been devastated by the foreclosure epidemic. But the first time home buyers tax credit and lower home prices have influenced the marketplace. While it may appear that home prices have stabilized, my guess is, they have not. I predict we’ll continue to see overall prices remain at their current levels and, in some areas, to decline well into next year. I think foreclosures and short-sales will keep pressure on home prices for another 2 to 3 years.
Now, if you would like to know more specifics in your locality, feel free to contact me. I will be glad to discuss this with you.