Hello??? Where have all the foreclosures gone?
As we enter 2011, our area is poised for a great year in real estate in the Washington Metropolitan Area. Inventory levels are down, we have jobs, interest rates are expected to remain at historically low levels, and we had the second highest level of price increases in the country last year.
We mentioned inventory levels are down, especially foreclosure inventory. Why are foreclosure levels down now? It started with the “robosigning” of documents in judicial states back at the end of October beginning of November timeframe when banks and the Government Sponsored Entities put a moratorium on foreclosures to review their processes and ensure checks and balances were in place in their foreclosure proceedings. Then, we hit the holiday season which typically signifies a slowdown in the process-yes, the banks and GSE’s have a heart. It will be interesting to see when the foreclosures will be released for marketing and how – all at once or methodically – and then we will see how it will impact pricing.
We have the jobs. Of the top 15 metropolitan markets, we have the lowest unemployment rate in the country. Major corporations have relocated here and are expected to continue to relocate here because of the education level of our workforce, multiple international airports, the cultural diversity, the Federal Government, tourism factors and so much more. In addition, CEO’s under 30 rank our region in the Top 10 so job losses are less likely to occur here locally.
Also, it is projected that interest rates will remain below 5.5% for 2011. In order to continue to see a rebound in the housing sector, rates must remain low. In response to this plea, the Federal Reserve announced it would keep the Fed rate at 0-.25% and have agreed to purchase $600 Billion in mortgage backed securities. At this time, it would have a devastating impact on the recovery if rates were to escalate substantially.
These factors contribute to more stable prices and in some cases, increasing prices. It is area specific with some neighborhoods seeing huge price increases while others are seeing decreased prices. It is so important to contact your real estate professional to learn more about your neighborhood. But it is a fact; low supply and high demand lead to increasing prices. Many purchasers who bought in the last 2 years have seen an increase already. We don’t expect huge increases like we saw in 2003-2006 but we expect to see moderate increases, which is healthier for the economy and housing sector. Another contributing factor to our increase in pricing is that international investors see the value in our region and in 2010, we were ranked second only to New York City in foreign investment both globally and nationally.
What else shall we keep an eye on this year? The restructuring of the Mortgage Interest Deduction, unemployment nationally, potential terrorist threats as we approach the ten year anniversary of 9/11, foreclosure activity nationally and if we can get a streamline approach to short sales. Stay tuned into what is happening so you too can have a successful 2011. Get it? Got it? Good!
Now, go sell something!