Sam's predictions for 2011
Sam Schneiderman, Broker-owner of Greater Boston Home Team shares what he expects to see on the job in 2011.
Last January, I predicted; “Lenders and buyers would continue the return to conservative fundamentals. Some sellers will get in sync with the market, sell and move on while others will continue to test the waters with high prices and/or poorly presented property. Many will continue to sit on the sidelines hoping to regain some equity before moving on. Everybody will be waiting to see what happens with interest rates, foreclosures, government programs and the economy.”
In fact, we saw interest rates move up toward year-end. Foreclosures started, stalled and continued, government programs targeted at real estate fizzled, and the economy bumped and ground its way toward a recovery that didn’t mature.
Here are my predictions for 2011:
Uncertainty will continue as politicians distort any progress made by opposing parties and the media continues pitching fear-based predictions as news. The general public will continue to buy into national trends instead of learning about local trends. Therefore, we will have a year of confusion ahead.
I also think that 2011 will also be a year of reconciliation.
I believe that instead of continuing to wait for an economic and real estate recovery, many Americans that have been hanging on will give up waiting and reconcile their own situations. Lots of people that had high expectations will “get real” in 2011. Some will finally sell their homes for less than expected, give them back to the banks or declare bankruptcy. Therefore, I will call 2011 “the year of confusion and reconciliation”.
On the other hand, those with the means will try to capitalize on other’s misfortunes. In fact, last year we saw a big push by opportunists eager to buy deeply discounted property from troubled owners or educate others how to do that, for a fee. Expect more.
Many short sale opportunities will be botched, mostly by lenders. Getting short sales closed will be costly. They will probably need to be quarterbacked by knowledgeable investors or experienced attorneys working with experienced agents.
Mortgage workouts will be practiced by attorneys that master them. Most lenders will modify only as a last ditch effort to save money.
Seller financing will have little impact in the overall residential market.
The way that foreclosures and foreclosure re-sales are handled will vary from lender to lender. Most will foreclose cautiously and sell foreclosures in bulk packages when possible. Foreclosures will not impact our market in all areas, but condo projects will continue to take the biggest hits when a unit is foreclosed in that project.
We will see continued loosening of lending guidelines in some places and re-tightening from time to time to respond to an economy that bumps and grinds forward. (i.e. Last year, condo standards loosened and tightened. PMI (Private Mortgage Insurance) companies consistently tightened, so that loans that lenders could grant could not be insured. This killed some loans with less than 20 percent down.)
There will be more separation between appraising and lending, more control over appraisal pricing and less done to address appraisal quality. That job now falls to lenders. More loans will be denied as mortgage underwriters are unlikely to sign off on appraisals that they question in any way.
The jumbo mortgage market will continue to be conservative. More outlets will slowly appear to service the needs of the self employed borrowers and other niches, at a price.
Interest rates will ebb and flow in an upward direction. The year will end with higher rates.
The market should pick up at some point this year due to pent up demand and buyers buying before rates rise. Then it will probably jerk along in no particularly predictable way.
Market conditions will be specific to certain markets segments and locations. Like last year, there will be some appreciation and bidding wars in some areas and depreciation in others, along with the usual rollback in the fall-winter market.
The inventory of good properties is likely to increase this spring with a continued shortage of good inventory in areas that are in demand. Buyers will continue being very selective and wait for the right property at the right price. Those looking for a long-term purchase to stabilize their living expenses and situations will eventually buy.
Unless we have a major economic or military surprise this year, I expect that most of us will find that 2011 will not be that much different than 2010.
