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"What's Ahead for Real Estate in 2009
by Denise Lones
2009 will be a year of recovery and stabilization for the real estate industry. Here are my 15 top predictions
for 2009:

1. Mortgage rates will drop, then rise, and finally stabilize
Rates will be at a historical low in the first part of the year.
Rates will go up in early spring.
Rates will level off after the first half of the year.

2. Investors will come back into the market in 2009
The Federal Reserve plans to pump up the housing sector by buying up to $100 billion dollars worth of
bonds issued by Fannie Mae and Freddie Mac.
The Fed will also buy ½ trillion dollars of mortgage-backed securities issued by Fannie Mae, Freddie
Mac, and Ginnie Mae.

3. Buyers will jump off the fence and come back into the market
With fixed rates in the mid-fives -- combined with pricing at 2003 and 2004 levels -- it is an excellent
time to buy. Buyers will finally jump off the fence and back into the market.

4. Sellers will become creative with alternative ways to add value to their home sale with incentives such as:
Interest rate buy-downs
Seller financing
Other incentives

5. Listing Inventory will go down as the market absorbs inventory
Nationally, listing inventory will begin to go down as inventory is consumed by many markets where
new home inventory is on the decline. Builders in 2008 focused on selling existing inventory and did
not focus on building new projects so as the year goes on inventory numbers will decrease. Coupled
with lower interest rates and higher investor confidence, this consumption of inventory will continue.

6. Market time will decline and remain on the lower end of the spectrum
Days-on-market numbers will go .down in 2009 due to a lack of new home inventory coming on the
market.
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With investors and buyers coming back into the market, the days-on-market numbers will level off and
then start to decline in early spring.

7. Real Estate agents will leave the industry in record numbers
Real estate agents that were not prepared for the 2008 market will continue to leave the real estate
industry. Agents that hang in there and focus on great client follow up will be rewarded in 2009.
Agents who remain will go back to basics to exist – then thrive -- in the current market.

8. Builders will use auctions to sell off inventory; many will leave the business entirely
Builders will turn to auctions to liquidate remaining properties.
Builders will leave the industry due to financial pressures from the lack of 2008 sales.
New construction will virtually grind to a halt as builders are unable to develop new product as a result
of excess inventory / poor sales in 2008.

9. New home inventories will reach record low numbers in the fall of 2009
Many builders stopped buying land in 2008, and will therefore be unable to build in 2009.
Builders stopped building in 2008 and concentrated on selling standing inventory. As a result, they
were not building new inventory. This will lead to an inventory shortage in 2009.
Existing new home inventory will be absorbed by the fall of 2009.

10. Consumer confidence will improve in the spring of 2009
Consumer confidence will improve in the spring of 2009, and buyers jump back into the
market…carefully.
Consumers will look to real estate agents for guidance in buying and selling.

11. Appreciation will be small to nonexistent in most markets as the industry stabilizes
Most markets across the country will see little or no appreciation while the market stabilizes and
inventory gets absorbed by the market.
Some markets will continue to see their markets decline into the second half of 2009 as inventory
levels stabilize.

12. The rental market will BOOM IN 2009
It’s estimated that almost 2 million homes will be foreclosed on in 2009. This will transform many
former homeowners into tenants.
Banks will rent their real estate owned properties rather than sell at a substantial loss.
Tighter credit criteria will force potential buyers to renew their current leases after they are turned
down for a mortgage.
Consumer fear and an uncertain employment picture will keep would-be, credit- worthy buyers on the
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sidelines, leading to reduced turnover in rental housing.
Americans who have realized a loss by recent homeownership will decide that ownership is not worth
the risk and trouble. They will sign a rental lease and happily return to rental living.

13. "In demand" homes will become the "safe necessity" of 2009
Smaller, green-built, and energy efficient homes will be in big demand.
Home with a good location in relation to work and school will be in demand.
Homes in the mid-range of price for their market will be in demand as more homebuyers become more
frugal.

14. Real estate companies will merge in 2009
Smaller real estate companies will merge with larger companies to make it through the market
downturn.
Competition in the industry will shrink as the number of companies and the numbers of agents is
reduced.

15. Second home markets will see far less activity; many will suffer in 2009
Second home markets in many markets will suffer due to the financial losses owners of second homes
experienced as their stock portfolios, pensions, or other investments devalued and deteriorated.
Second home markets will suffer due to consumers’ need to relocate assets and financial priorities.
While we will see adjustments in 2009, it’s sure to be a much better year than 2008.
Copyright © 2009 Realty Times. All Rights Reserved.
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