Last week I viewed a presentation by Lawrence Yun, the National Association of Realtors Chief Economist.  Some of his comments are as follows:

  • It has been a rough four years for the housing recession.
  • 2009 experienced more sales than 2008; however the prices were lower during 2009.
  • Yun is projecting a 15% increase in residential sales for 2010.
  • The first two quarters will benefit from the housing tax credit.
  • The final two quarters will benefit from job growth.
  • Increase pressures on residential housing will be affected by 16 million renters who have the ability to purchase a median priced home in their areas.   Many of these renters are waiting and watching the market.
  • The US population growth is about 3 million each year.
  • In many markets prices have overcorrected and are now starting to rebound.
  • We have a 6 month supply of houses which means that we should start to see annual appreciation rates of 3-5% for years to come.
  • Interest rates for fourth quarter of 2010 most likely will increase to 6%.
  • Foreclosures for 2010 will be similar to 2009.  These foreclosures are based upon sub-prime borrowers making loan previously they can’t afford and strategic defaults (home owners who can afford the payments, but are discouraged about reduced property values and stop making payments).
  • Foreclosed properties are selling much faster than they did in 2009.
  • Commercial real estate will have a bad year in 2010.  Commercial values have fallen 40%.  This situation presents a buying opportunity for those with cash.  
  • Temporary employment is rebounding and should precede permanent jobs.

If Lawrence Yun’s predictions are accurate, now is the time to purchase homes in the lower price ranges.  Once jumbo interest rates decline, home buyers in the upper price ranges should start buying.  For those with cash, purchase commercial properties at a discount.