So, the end of 2009 is just around the corner. It's been a very interesting year in Real Estate, to say the least! Personally, it's been the most interesting year I've even seen with lots of twist and turns. Many of which, none of us expected and some we prayed would come our way. What's the saying "sink or swim." I believe the Realtors that have been around for a long time will swim or survive this Great Recession. Some of the newer agents, the ones that jumped in during the boom may have a harder time surviving, what is now known as the GREAT RECESSION! However, if you can make it through these difficult times new or experienced you have earned a badge of courage, that all will respect and admire years down the road when these times have come and gone. It used to be "something" to say I worked through the 90's and survived. This will be like surviving the sinking of the Titanic!!
I believe next year will also be full of new changes and full of stricter regulations, but I can't imagine it coming close to all the changes we witnessed during 2009. This is what I'm expecting to see happen in Southern California - specifically the Inland Empire area. (Riverside and San Bernardino Counties)
1) Increase Inventory - We hardly have any inventory to show our buyers. Expect to see many of the REO's released that have been on hold due to the moratorium on foreclosures. I believe that is already occuring, but by mid January we will really start to see a difference.
2) Increase in Rates - Expect to see at least a 1% rate jump by the end of 2010. With the government not buying anymore mortgages, it's back in the hands of investors to buy up the securities and they won't to buy them with these historically low rates. Too much RISk for them.
3) Tax Credits - Set to expire in April, 2010. I don't expect to see that extended. I pray it is extended as we need every bit of help we can get and it's a great incentive for first time buyers as well as move up buyers.
4) In the Inland Empire - Expect to see around a 18% drop in property values. Ouch.....I know! But with the release of all the REO's held back from sale due to the moratorium, we must expect to see a decrease in values. High Desert and Low Desert communities can expect to be hit much harder, with a possibility of seeing as much as a 30% decrease. The OC (Orange County) won't be affected anywhere near the numbers the Inland Empire can expect to see. I believe they will see numbers somewhere around 5-8%.
5) This is going to be the year of SHORT SALES!!! Banks are going to push Short Sales and we will see a huge streamlined process with much quicker response times. No longer is it going to take months and months to get an approval. I heard approvals will be passed down in as little as 10 days, it will be interesting to see if time-lines really happen that quickly. Nevertheless, we will see banks cooperating with much quicker time-lines. Foreclosures will still be around, but nothing like we've seen in the past few years. It's in the banks best interest to keep the homeowners in the property and sell it short. As foreclosures are just too expensive for banks. They are required to maintain all the lawns, pools, winterizations, not to mention all the vandalizing expenses. They save thousands on legal fee's, city code violations and the borrower benefits by getting cash for key's at close of escrow, plus saving their credit rating. They are only effected two years by doing the Short Sale, compared to 7 years with the foreclosure. We will see that this will also stabilize property values. Bank Owned properties only continue to drive down values. The "non-REO"Realtors also win, as we get the opportunity to list these homes, no longer will the REO agents control 99% the listing inventory. We all will have a fighting chance to list homes, sell them and earn a stable income. This is huge victory for us Listing Agents, who did not get in with the banks. Myself, included. The way I see it, it's a win win for everyone! The REO agent will still have plenty of inventory to keep them busy and gives the rest of us Realtors a fighting chance for 2010.
6) Finally, I believe we will see and end to these "loan modifications" as they don't work!!! I can't tell you how many people I've talked too that won't do a loan modification for the simple fact the banks will NOT adjust the loan amount to the current market value. Did you know that doing a loan modification will effect your credit for 7 years! I've even heard of a loan mod dropping a clients Fico score by 100 points and he didn't even miss one payment. Just by doing the loan modification his score was affected and it will stay on his credit for 7 years! WHAT??? When a Short Sale only effects your credit for 2 years. It's a no brainer!!! Of course, you will run into the people that don't want to move, regardless of property values or the effects on their credit and will do the loan modification. But those people will be far and few between. Most people don't want to owe $400,000 more than the REO listing 2 doors up that just closed Escrow. They will just sell it short and completely forgo the loan modification process and damage to their credit.
Well, that's what I see happening next year in my market place. It will be interesting to look back at this post this time next year and see how close I came to the actual events that unfold. I would love to hear what you think will happen in your market or if you're a SoCal Realtor what you see happening.
In any event, I wish all my fellow Realtors the best for the up coming year. You are truly amazing for hanging on and making it through 2009 and this Great Recession as a whole! We will be better Realtor's once this storm passes and have a badge of honor that no one will ever be able to take away from us. AS WE WILL BE AMOUNG THE VERY FEW THAT SURVIVED THE GREAT RECESSION WITH OUR REAL ESTATE LICENSES IN HAND AND A 1099 TO PROVE IT!!
Best Wishes,
Michelle Theisen, Coldwell Banker.
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