It’s 2010 and the experts are weighing in on the housing market. Here is the forecast according to Money Magazine (December 2009)

There is talk that the market will stabilize in 2010 but regaining equity may take some time.
Home sales are rising and inventory is going down. Experts believe the housing market will hit its bottom in the second half of 2010 but that we will still see another 5 – 10% price drop on houses.

This is still a great time to buy a home whether you are a first time buyer or buying your next home. There will be another wave of foreclosures in 2010 which will boost housing inventory. Interest rates are predicted to stay low in the first part of 2010 or at least until the extended federal tax credit expires June 30 2010 (you must have an accepted purchase agreement by April 30 2010 and close by June 30 2010). This tax credit is good for first time home buyers and other buyers who are buying their next home and have lived in their current home for at least 5 of the last 7 years.

So, what should you do?
If you are hoping to buy a home, make your move now. Right now the market is in your favor but as the economy improves the housing market will become more favorable for sellers. Keep in mind, if you are looking to purchase a lower priced home (under $150,000) expect competition, especially if the house does not need a lot of work done to improve it. If you are trying to purchase a fixer upper that is already in foreclosure or owned by a bank, expect A LOT of competition. In the Twin Cities market, many of these homes (under $100,000) end up in multiple offers within a few days). To improve your odds of getting one of these amazing deals be prepared to offer above list price, be flexible on closing time, offer more earnest money than normal or pay full cash.
However, if you are buying a higher priced home especially if over $500,000, the demand is not as great so you can typically offer about 10% below list price. These homes will still see some drop in value over the next year so offering below list price (always make sure your agent checks out the recent comparable sales in the area) will provide a cushion for this reduction in value.

If you are hoping to sell in the next year, hopefully you have some equity because most likely you’ve lost quite a bit of value on your home. If not, and you don’t have to move, experts are saying hold off. But, if you want to move or need to move, you may be able to recoup some losses on your current home by buying at below market pricing on your new home. Essentially, you can buy more house now than you could even a year ago so in many situations, you may “break even” if you have to sell at a loss but buy at a low price (and great interest rate) for instant equity.

The Twin Cities real estate market is showing similar trends – contact me about your specific situation and I’d be happy to do some market analysis for you!

Jen McKinnon
Realtor / Investor
AGENT REFERRAL NETWORK
MN Real Estate Team – #1 Team In Minnesota

612.384.1073
jen[at]mnrealestateteam[dot]com