Outlook for 2009 Housing and Mortgage Markets

January 5, 2009
Matt Isleib

 

One thing is certain; in 2009 it will still be a buyer’s market. The most recent stat that I have seen is Fairfield County and that is an 18 month inventory of existing homes. That is a good amount of inventory and could very well be a good indicator that 2009 may not shape up to be any better than 2008. As optimistic as I am or want to be stats are stats and that is a huge inventory.

 

If you have been waiting on the sidelines as a Real Estate investor 2009 may very well be your year for the taking. I personally believe that we still have some downside to the housing market here in Connecticut. However with the vast inventory of homes and some research there are some incredible buys out there. I have personally seen homes that had sold close to 300k at their peak and being short sold for fewer than 100k.

 

The equity markets started out the New Year on positive footing although there was little news out there to trade on. The Dow Jones opened trading on January 2, 2008 and closed that day at 13, 043. On January 2, 2009 the Dow Jones started the first trading day of the year at 8,772. Looking back at 08’ the equity markets certainly had a rough time of it. I think 2009 will be bumpy however I do not think that it will be as volatile as last year. I also do not put much faith in a huge rebound of the Dow. I am optimistic that by year’s end we will hopefully be past the half way point of this financial meltdown and am looking at 2010 to be a better year for the equity markets.

 

Mortgage rates are AWESOME. They are the lowest that they have been in over 50 years. 30 year fixed rate mortgages have been under 5% now for close to a month. Refinance business has been strong but as good as rates are there are still several problems standing in the way. For one the housing market is still declining making it very difficult to get the appraised values that would be needed to make refinancing an option for some. Two is unemployment. It is hard to be able to qualify for a lower mortgage payment when you are not employed. I think for at least the first half of 09’ that rates will remain low. It would be in the Fed’s best interest to see that happen. I truly believe that employment is going to be the key to making the turning point of this mess but I also believe that low rates will also be helpful.

 

I have posted earlier on Loan Classroom how mortgage rates are derived. A combination between the MBS (Mortgage Backed Securities) and the Ten Year Treasury Bond. Here is a chart of the Ten Year Bond.

 

 

I think that we can see the 10 Year Treasury stay in the low 2.00% range for some time. So I am optimistic that we will see rates stay in the low 5 to under 5% range for a while.

 

Selling Real Estate in this environment is tough. If you are a seller you have to be patient, you also need to be realistic. Although I see values going lower still you need to find a good Realtor. If you are using a Realtor to sell your home he or she should be able to give you a plethora of info on your local market including expected turn times of homes sitting on the market. If they cannot or are not ready to sit down and go over this with you, look for a new Realtor. You also may want to be creative when listing your home in 2009. That could mean painting rooms, keeping the house extra clean when being shown and also staging your home. I have posted several blogs on helping you sell your home in 2008. One specifically on staging your home. You should also ask your Realtor for their advice on what might help sell your home.

 

In 2009 all things considered I think we are still going to have a tough go at it. Patience is going to be the key as is creativity. There are still a lot of hurdles to overcome but I am optimistic that coming into 2010 we will be sitting in a much better position than we are starting 2009 in.  

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