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.
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!