In the absence of a crystal ball to gaze into to discern the health of the real estate market, industry analysts are busy deciphering hard numbers to determine how 2010 is shaping up in terms of economic recovery, and the status of the real estate market.
With the federal government pumping more cash into home buyers’ pockets with the extension of the first-time home buyers credit (up to $8,000 for qualifying purchases) coupled with low interest rates, some have jumped at the chance to buy their first home, but not everyone is feeling the love as homes continue to foreclose and credit standards squeeze even well-qualified buyers.
A record-high unemployment rate and the threat of even more foreclosures on the horizon make the possibility of a quick recovery unlikely, say industry professionals, adding that the pendulum is likely to swing the other way, starting in 2011.
But what does that mean for the local market? California was hit hard by the economic downturn, particularly so in the Central Valley as home values plummeted and foreclosures soared as adjustable rate mortgages matured, inflating mortgage payments beyond what the homeowner could afford.
The Oakdale Leader approached John Melo, CEO of Century 21 M&M and Associates for insight into the local real estate scene for a question and answer session.
In your personal and professional opinion, would you say the market has finally bottomed out and that prices will hold steady or recover in the coming year?
This may be a two-part question. One, yes, I believe we are at the bottom of the real estate market for entry level homes and we should possibly see a small gain on price… The mid to upper end homes we have not yet bottomed out that would be homes over $400k in to the million dollar homes…
What percentage of last year’s sales were short sales? Do you foresee an end to this trend?
In 2009, we had a small amount of short-sales and we will see an increase of short sales as REO bank owned sales may slightly drop due to more banks doing loan modifications.
What are your predictions for the 2010 real estate market in the Central Valley, and specifically, Oakdale?
In the Central Valley we will see a repeat of 2009 with a possible small increase in sales, in Oakdale we have seen the bottom and we could see a small price increase due to lack of inventory.
Is there anything exciting happening in real estate?
Not so exciting is the fall of commercial real estate this year… I see a glimmer of hope for jobs and the economy if new home construction does slightly increase in 2010 with the possibility of interest rates holding in the 5 percent to 6 percent this year.
How has the housing stimulus helped stimulate sales?
The best thing the government did was the $8,000 first-time tax credit last year and the extension into this spring. Not only did it help first-time buyers, but it helped get the housing market going and where the housing goes so does the economy.
Any predictions for a market recovery?
The best I can see is a 2011 possibility if we can get the unemployment rate to head down. Once we actually see that drop we can start to breathe easier, that is what it’s going to take to get the economy as well as housing to recover.