REAL ESTATE PRICES TO DROP UP TO 20% IN 2011!

By
Real Estate Broker/Owner with REO PRO REALTY

If you are counting on real estate values rebounding soon, think again.

Here are some numbers that will be major factors in the real estate market recovery:

$14 Trillion Dollar U.S. Deficit.  The 2-year extension of the Bush era tax cuts will continue to drive up these numbers.

$9 Trillion loss in real estate value since prices peaked in 2005.

9.4% U.S Unemployment & 12.5% CA Unemployment. Last month we gained 103,000 jobs nationwide while the workforce grows by $150,000 every month.  Even if we gained 200,000 new jobs a month, it would take until 2022 to get back to 2005 employment levels.

$28 Billion California Deficit.  Expect cuts, cuts and more cuts in public services.

$36M Sonoma County Deficit.  Same situation in our beloved Wine Country.

There are 54M mortgages in the US.  27M have had at least one late payment over the last 6 months.

1 in 7 homeowners nationwide are at least 3 months late.

4 Million more foreclosures are expected in 2011.

World-Renowned economist Nouriel Roubini (aka Dr. Doom) was one of only a handful of experts who predicted the collapse of real estate prices well before they happened.  He's predicting another trillion $'s in real estate value losses. 

http://dealbook.nytimes.com/2010/12/06/dr-doom-predicts-another-1-trillion-in-housing-losses/

I believe the douple-dip in prices will be felt more on the mid to upper end market here in Sonoma County (>$500,000).  While we may see a reduction of 3-10% on the low end, we could see up to a 20-25% further price erosion on the mid to high end properties.

If I was a homeowners whose mortgage payment is above 25% of fair market rental even if the home was not underwater, I would seriously consider renting.  

For homeowners whose house value has dropped to below the loan(s) levels, the best option is a HAMP Loan Modification and/or a HAFA Short Sale.

There are many experts predicting values may not rebound for 5-7 or more years.  This projection has to be a major factor when making that crucial decision.

Happy & Prosperous 2011!

 

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Rainmaker
908,388
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

Rudy, great information.  California is on the verge of bankruptcy, so that can only hurt the real estate market all the more.  Anything over 500K in my market now is considered a luxury home.  Experts are expecting these home to start going under in 2011.

Jan 08, 2011 04:55 AM #1
Rainer
37,641
Brad Hornshaw
Brad Hornshaw Realtor Lynnwood, Bothell, Everett - Lynnwood, WA
Realtor, Listing Agent, Buyers Agent, Investments
Rudy Not what any one wants to hear ,But I am afraid this is true....Brad
Jan 08, 2011 05:03 AM #2
Rainer
34,256
Mike Kazi
AtoZTasks.com - San Bernardino, CA
AtoZTasks.com

Hi Rudy,

That was really helpful! Everybody knows that there is something going in the real estate scenario, but very few have the actual picture and less than that knows the numbers. This is pretty crazy! This is something everybody should know because people are losing faith in the real estate business and a lot of people are having hard time with managing their payment since the frustration of forecloser is breathing on their neck all the time. We should all have the chance to get the actual evaluation of our hard work.

Jan 08, 2011 12:24 PM #3
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Rainer
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Rudy Romo

REO Pro Realty
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