What to expect in 2009:
- A (Qualified) Buyers Market for the next 9-12 months
- Less ‘fantasy’ financing opportunities (no more 100%-103% financing)
- More ‘reality’ lower fixed interest mortgage rates for qualified buyers
- Greater number of homes for sale (increased supply)
- Lower number of home buyers (lower demand)
Resulting in:
- Increased amount of mortgage refinancing for 1st half of 2009
- Downward pricing pressure (3-6%) on new construction / re-sales
- Increased distressed sale or foreclosure events
- Longer days on market (DOM) versus recent history
- Lower number of SOLD single-family home, townhome, condo sales versus 2008 (21,842 per MLS, <1900 month average)
. . . The short answer – more of the same – at least for 3 quarters. Unfortunately, and we can no longer ignore it – we are in the throws of a full blown recession… it took us some time to get here, and it will take some time to get out. We should expect to see more local and national layoffs in the 5-15% range, more distressed home sales, and more foreclosures at every price band (no one is immune to this beasty of an economic downturn). Our lack of consumer confidence permeates every market.
The good news.
Remember, there is always a silver lining or a ray of hope – all you have to do is keep your head (and attitude) up! The good news is Central Texas and Austin specifically is poised to weather this downturn potentially better than any other medium-to-large city in the nation!
Our local economy is stable and still growing, even if it is at half the rate we projected last year. Housing starts (new construction) will be reduced approximately 20-25% to match the lowered demand figure and existing home prices will likely see a small price adjustment (down 3-6%) over the next 9 months.
The sun will come out tomorrow!
By 4Q we should have shaken off these blues and start to see a rebound in home prices and consumer confidence. The bottom line? 2009 will be down when compared to 2008 in terms of # of closed homes, and home price appreciation (flat to down).
Opportunity knocks for “Buyers”
While I don’t recommend ‘timing’ a market – If you are old enough to remember the post Internet-Bust effect on housing in Austin, then you’ll have to agree we are probably looking at what could be the VERY BEST MARKET opportunity for home buyers. If you have a W2, at least 5% cash, and the better credit scores to qualify this summer may be the best time to invest in a new home, investment property or second home. That buying opportunity should last approximately 6 months until the rest of the economy rebounds.
The best time to invest is when the market is down. If you are a first time home buyer or have your ‘financial house’ in order – now is the time to act with resolve to re-build your wealth through residential real estate.
