I hope all of you had a nice Christmas season. Did you get what you asked for? Was Santa good to you? I hope so! Well as we roll into 2011, it’s all about what the market will give you.
If you are a seller, the market is going to give you values that are similar to what we saw in 2004 and 2005. The market has lost all gains that we saw in the boom years. Those boom years stole buyers from today with all the creative mortgages and almost all those purchases are the foreclosures of today. If you are a seller the market will allow you to sell, but at a value that is probably much lower than you want.
If you are a buyer, the good values are starting to go away. Most of the inventory below $300,000 has remained steady for the last 6 months. Below $200,000 we have actually seen some increases in some areas as inventory is tight. Interest rates have started to rise. We saw a low of 4 1/4% and today we are around 5%. I expect rates to gradually increase throughout the year topping out at just over 6%. If you are a buyer, the low point seems to be here if not already passed. The perfect storm of low rates and desperate sellers occurred in October and November.
So as I have been preaching all year in 2010, I preach again in 2011. Don’t sell unless you are doing a move up or you have to. If you are a buyer, BUY NOW before rates and prices increase. Very few can hit the absolute low point. If we are not there, we are close. 2011 will be stable with no real appreciation. We still have lots of inventory to sell. There will be no booms like 2006-2008. Those were record years. We are closer to normal than most remember. I think 2012 will see growth and perhaps 2-3% appreciation and that will be the norm. When you compare to the volatility of stocks, real estate is stable and very safe over the long haul.
HAVE A PROSPEROUS, SAFE AND HAPPY NEW YEAR!