As we approach the end of the year, it is time to reflect upon what we experienced, what is happening now and where things may take us next year to allow us to adjust our plans and to make the most of our opportunities ahead of us!
This past year was once again riddle by media speculation on housing and its demise on a national level while our market was virtually ignored – even by local media outlets – on how resilient we are relative to the rest of the country. We will see this again this upcoming year as negative news always sells. Keeping this in mind, areas of concern that will be reported by the media are interest rates, pricing, foreclosures and short sales. We have seen a decrease in inventory as the holiday season is upon us but houses continue to sell nonetheless. The driving forces include interest rates which remain at generational lows and prices that are beginning to rebound in many areas encouraging fence sitters to jump off and become home owners.
So, what is my forecast for 2011? Let’s take a look!
- Short sales will remain difficult as banks continue change the rules under which they operate. Until there is a systematic, streamlined process buyers and sellers will remain in peril when dealing with short sales. Recent issues have been with banks countering contracts to ridiculous values and countering with unrealistic settlement dates of just a few days after making our clients wait over 15 months for an approval. The banks need to hire people familiar with the home buying process or train the ones they have to understand how real estate sales are processed in order to facilitate more successful sales. The problem is, this won’t happen in 2011.
- Rates hit record lows the second week of November and have increased every week since with the announcement of QE2. However, the central bank voted to keep the target range for its benchmark federal funds rate at 0 to 0.25 percent, and reiterated its commitment to purchase an additional $600 billion in long-term Treasury securities by June 2011. This announcement should help keep interest rates below 5.5% for 2011.
- New home sales will rebound locally as builders have weathered the storm. Additionally, we will see more local builders enjoy success as new companies are formed or have been formed recently and they can fill the new home niche better than the national builders with their knowledge, skill and flexibility as they have lower overhead. Competitive pricing, up to date floor plans and desirable locations will contribute to all builders’ success in 2011.
- Many agents, loan officers and title agents will drop out of the business as the business becomes more specialized with short sales, foreclosures and continuous changes in financing. The consumer will demand professionalism from their agent. The new agent pool will be younger and will not only embrace technology but will use it to their advantage over “experienced” agents.
- More agents will gravitate to utilizing video as the consumer prefers video over text and pictures. Those who adopt early will enjoy more success than those who do not embrace this medium of communication – much like the implementation of various social media tools. Video is the new trend in real estate in 2011 and beyond and is here to stay.
- We will see a moderate increase in prices in 2011. Some areas will see greater gains and some will see moderate declines as each market/neighborhood has its unique benefits and challenges. The saying has gone from “all real estate is local” to “real estate is hyperlocal” – use a professional.
- The banks, Freddie Mac and Fannie Mae will slowly release foreclosures onto the market to protect their values and the market values in neighborhoods. Foreclosures will remain a constant force in the news in 2011.
- The economy is recovering slowly but at a rate that has been insufficient to bring down unemployment nationally. Locally we are at 4.8% and we should remain low compared to the rest of the country. The DC area boasts the lowest unemployment relative to the 15 major markets around the country and this trend will continue through 2011. This trend will help sustain our real estate market as houses are where the jobs go at night.
- The market and consumer will demand more professional agents with the ability to provide the right tools and technology to make their transactions smoother and efficient. Agents who attend trainings, earn designations, and continue their education will see their incomes soar above the agents who continue to conduct their business as usual.
- Companies that provide up to date educational opportunities, hire the best of the best, invest in technology, services and support plus trim their expenses by making tough choices will thrive in 2011 and beyond. Companies that are top heavy, unable to consolidate or provide tools necessary for success will fail and close providing opportunities for well balanced companies. As a result, more closures in the real estate industry will continue in 2011.
As you can see, the New Year will offer challenges and opportunities. Recognize how you can take advantage of what is presented to you and make 2011 your best year ever! Get it? Got it? Good!
Now, go sell something!