My 7 Predictions for San Francisco East Bay Real Estate for 2010
It is now 2010 and many are wondering what this year will hold for the real estate industry. My predication is there will be some changes, but a lot will be the same. Here are my 6 predictions for the year ahead.
1. Foreclosures. Foreclosures are not going away albeit in my opinion we will not necessarily see a flood of inventory. Yes there is a back log of inventory and yes banks do want to get these properties off the books. BUT and the big but here is inventory is down; many of the foreclosures in the East Bay are selling with multiple offers in a shorter amount of time. If you look at this strictly from a business standpoint why would the banks want to flood the market with inventory to have prices come down and have property languishing on the market?
2. More Foreclosures in Higher End Markets.Many of the higher end markets in the East Bay such as Rockridge, Montclair, Crocker Highlands, the Lakeshore area and Piedmont did not feel the pinch when the first wave of foreclosures hit the market. With more buyers in the “first time” home buyer market (≤ $729,750, the limit for the FHA jumbo conforming loan limit), and many of the home owners in these areas purchasing their homes with interest only or ARM financing, there will be more foreclosures in these areas. Do I think we will see a huge wave as we did in the lower end market, no. But there will be more than have been seen in the past.
3. Lower Inventory. In my opinion we will continue to see lower inventory than has been experienced over the last couple of years. With many of the foreclosures off the books and many home owners choosing to stay put if they can, we will see less inventory in the marketplace. In addition, the banking industry seems to like to make money and with inventory down and prices beginning to stabilize, I am not sure if they want to go back to a glut of inventory and buyers calling all the shots…
4. Short Sales are here to stay. Many buyers and agents shy away from short sales because of the unpredictability of the outcome. Many times you can wait around for months for a response to only find out that the bank is not willing to participate. Some banking institutions are better than others, and there is a lot of pressure for the banks to work with homeowners when selling their home as a short sale. I have started seeing many of the agents who sell foreclosures starting to sell short sales. In some instances the lenders who would be obtaining these homes through the foreclosure process are begging to look as short sales in lieu of foreclosure.
5.Pricing to Begin to Stabilize. With a decrease in inventory and incentives for buyers to buy such as the Home Buyers Tax Credit and low interest rates, there will be brisk activity with first time home buyers which will help to start stabilizing prices.
6.Appraisals will continue to be a thorn in everyone’s side. With decreasing inventory and with some properties selling with multiple offers in areas, appraisals can be tough. I have seen appraisals come in significantly below the offer price and the property had multiple offers. There is not a whole lot of consistency across the appraisal community. And if the appraiser is coming to a city or community they are not familiar with, then it can be a disaster.
7.Interest rates will go back up. The last 6 months or so we have seen historically low interests rates. With the beginning of stabilization in the real estate market, interest rates will more than likely begin to creep back up.
2009 was a bit of a roller coaster ride and my prediction is 2010 will also be an interesting, but different, ride.
One Response to “My 7 Predictions for San Francisco East Bay Real Estate for 2010”
Lisa Cartolano
chrishudson
Nicole Westmoreland
Greg Fielding says:
January 12, 2010 at 9:07 pm
Million-dollar foreclosures will be interesting to watch over the next couple of years as all of the Option-Arm loans recast and interest-only Alt-A loans adjust.
And without any move-up buyers, who is going to buy all of these homes?