From national and Santa Cruz County real estate to the U.S. economy, the predictions for 2011 are in. Like any predictions, they vary from gloomy to cheery. Overall, the U.S. forecasts for national and Santa Cruz County real estate are more positive than negative for 2011.
1. Real Estate Economy Watch predicts: People are interested in buying a foreclosure. Nearly half (49 percent) of U.S. adults are at least somewhat likely to consider purchasing a foreclosed property, up from 45 percent in May, 2010. Despite the rising interest in buying a foreclosed home, an increasing number of U.S. adults also recognize negative aspects to buying a foreclosure.
2. Bill Redfern, CEO of A Buyer’s Choice Home Inspections says: Presale inspections are on the rise. Sellers, and particularly banks, have become far more interested than in the past in having presale inspections conducted to help attract buyers. This business, which helped sustain inspectors during the downturn, is expected to grow in 2011 even as regular inspections come back. I might be optimistic, but I think in five to 10 years every listing coming to market will have a presale inspection done.
3. The National Association of REALTORS®’ (NAR) Chief Economist Lawrence Yun is projecting:
• Once businesses pick up spending, job gains will quicken and home sales—fueled by strong affordability and plenty of pent-up demand—will rise.
• 5.2 million existing-home sales in 2011, up from 4.8 million last year.
• Modest improvement in prices—a rise of about 1 percent this year on a national basis. That would be the first in what Yun says will be a series of small but steady gains in the years ahead that will eventually bring home sales back to a period of normalcy.
• Yun says all of the price excesses from the housing bubble have been squeezed out of the market and interest rates remain at historically low levels, making buying attractive now.
4. The Joint Center for Housing Studies says:
• If the past is any guide, the strength and sustainability of the housing recovery will depend most on the bounce back in employment growth. Unfortunately, most economists predict that the unemployment rate will remain elevated as discouraged workers reenter the labor force amid slow gains in jobs.
• The oldest baby boomers are just turning 64, with millions soon to follow. Despite their losses in wealth caused by the correction in home and stock prices, the baby boomers will drive demand for senior housing suited to active lifestyles as well as for assisted living facilities.
5. According to the Standard and Poor / Case-Schiller index: Home prices are expected to rise 12 percent in the next five years. And, according to a survey of economists, that upturn should begin in 2011.
6. WalletPop.com’s prediction for renters in 2011: The American Dream will include both renting and owning:
• Lifelong renters will begin to buy. As jobs grow, prices hit bottom or move past their bottom in the handful of appreciating markets, and interest rates start what is likely to be a long, volatile climb up from the all-time lows of 2010, extreme affordability will push even some lifelong renters off the fence and into the market.
• Lifelong owners will begin to rent. Baby Boomers who have owned homes for decades and lost them at the trough of the job and housing markets will become renters-by-choice. Retirees will rent their current homes, rather than selling them, move to warmer climes and rent instead of own their retirement homes, at least until the housing market stabilizes and the mortgage market relaxes.
Although no one can be certain what will happen in 2011 - especially for the struggling national and Santa Cruz County real estate markets - we can all gain a little hope from these 2011 forecasts.
If you’d like to buy or sell a home in 2011, I can help. Call me at 831.662.6522 or for additional information visit my website at www.MySantaCruzRealEstate.com.
The Joint Center for Housing Studies
Interested in buying a foreclosure
Chief Economist Lawrence Yun