Outlook Real Estate Sales in 2011 and Beyond

The following article includes a lot of information we found in an article written by Lisa Udy, an Ogden Utah real estate professional providing services for both home buyers and sellers of Ogden Utah homes. We have added our own thoughts to her article and hope you find it interesting reading.

2011 is a brand-new year for the housing market and while many real estate experts seem to be hopeful, the outlook is not all that favorable in the short-term in most real estate markets.

To put it bluntly, jobs are the key to a housing market recovery. Without job creation, homeowners will continue to face foreclosures and won't be able to qualify to buy a bigger home. With existing home inventories still high, housing in 2011 will not recover unless consumers have not only jobs, but also the confidence to snatch up the excess of homes already on the market.

Here are some points to consider:

There Will Be Few Buyers: There are too many people without jobs and lending standards are much more stringent. The pool of potential home buyers is dramatically smaller than just a few years ago and until that changes, a housing recovery cannot and will not happen. The job outlook is a bit more positive for 2011 than 2010 was, but we still have a ways to go.

The Government is Doing Nothing to Help Create Jobs It would certainly help if Congress could stop the in-fighting and point-scoring and address the critical need to create jobs. While both the Republicans and Democrats ran on a job-creation platform last year, they are spending virtually all of their time fighting over social issues and the budget, and not a minute figuring out how to grow the number of jobs.

Interest Rates Will Remain Low: With a fragile economy, the Fed is expected to keep interest rates low for at least the rest of 2011. Low interest rates make homes more affordable and that, in itself, will be perhaps the one bright spot in the housing market and a source of some demand. If, however, rates are driven up by inflation or as a result of the Fed pumping so much money into the system, the nascent housing recovery we are just beginning to see a glimmer of in some markets will come to a halt.


McMansions Are Out: There has been a clear trend for the past couple of years that will continue. Home buyers are no longer interested in huge homes. Everyone seems to be downsizing or looking to save money.

Seniors are looking for smaller, more open floor plans in homeowner association communities where some or all of the exterior maintenance is done by the association. First time buyers are looking for smaller homes in walkable, affordable neighborhoods with good schools and reasonable property tax rates.

If you're currently living in a large home,selling your home in the near future will be more difficult do to this downsizing trend.

"Flipping" is also out The speculators have been driven out of the housing market. There are no longer opportunities to buy a home and then resell it within a year or two and capture a nice profit. Those days are gone -- "good riddance," say the authors of the Real Estate of Florida website and blog.

Today's home buyers are thinking more long term with their home purchases and this trend will continue. Home buyers today realize that that tactic is just not viable anymore. Home buyers will be more cautious and look into longer term home ownership. This trend will cause buyers to be more thoughtful about the homes they purchase thinking how this home will fit into their needs and plans over the next 20 years or more.

Prices In Many Areas Will Continue Falling:The bottom of the real estate market in many areas is still yet to come although the Sarasota Florida area seems to be showing more signs of life and stability than other areas.

There Are Still Lots of Foreclosure Properties: Many banks have stopped the practice of processing foreclosures with incomplete paper trails so there are homes still waiting to be foreclosed upon so banks can move them off the books. Once the paperwork process is fixed, banks will start foreclosing again, although at a slower pace to make sure they're doing it correctly. The Federal Reserve estimates that there are 2.5 million homes expected to foreclose in 2011, about the same as in 2010, with another 2.0 million in 2012. As long as banks foreclose gradually, home prices in 2011 should continue on the stabilization trend.

New Home Construction Will Continue To Struggle: With few jobs and low consumer confidence, the home building industry will continue to struggle in 2011. With the increasing cost of the materials used to build a home and buyers just not confident that they'll even have a job by the time a home could be built, the home building industry will stay as depressed.

Opportunities Are Out There For Cash Buyers: As in 2010, cash buyers and investors will continue to have the upper hand over buyers making offers with financing contingencies. A smart private seller, and certainly the banks selling foreclosed properties, will accept a lower price if the contract has no financing contingency and even a lower price if there is no inspection contingency.
Banks are looking for quick sales to cash buyers who can close quickly. If you're a home buyer competing against cash buyers in 2011, be sure to make your offer as attractive as possible.

If you need a home now because you have relocated, there are certainly bargains available out there, but understand that while short-sales and foreclosures seem attractive, you are bidding against cash buyers and investors so your offer will have to be strong. If you are a first-time buyer, you need to be cautious because prices could easily fall a bit further before they start going up again.

According to Cheryl Stimac, a well-known Tampa Bay Florida real estate professional, if you are trying to sell a home right now, you need to listen carefully to what your Realtor says about the price of comparable houses today. It doesn't matter that someone down the street sold an equivalent house for $50,000 or more than the Realtor says you can get now. Price on average across the U.S. are at a nine year low and, you, like it or not, are selling it today, not 12 or 24 months ago. If you can't take the price drop, hang on to the home for a couple more years. Things may get better, but not real soon.