2010 Real Estate Market Predictions
So the time has come to make some predictions on what 2010 will hold for the Twin Cities Real Estate Market, and more notably how this will affect MN First Time Home Buyers.
Well, we saw a lot of change in 2009 – 8 Thousand Dollar Tax Credit signed into law replacing the 2008 $7,500 version; Market went down, then up, and then back down for December; an extended and expanded tax credit for repeat homebuyers; and some signs that the economy may be bottoming out.
I don’t normally like to play the role of fortune teller, but I have to chime in on this issue of market stabilization and economic recovery. My gut reaction to “the worst is over” claims is that the worst may in fact be over, but there is no return to grace coming in the next 2 or 3 years. What we saw in 2000-2005 was very abnormal and had never happened before in our housing market’s history.
People who believe home prices will “rebound” to their 2005 levels in a matter of years are severely mistaken. Those were inflated prices which did not reflect the real value of most homes. I’ve included a graphic here which shows the Median U.S. home prices since the 1960s. I’ve also included another line which is the average price from 1968 to 2000 as a constant.
As you notice by looking at the two lines, around 2000 we shot up drastically and for the past 3 years have been descending almost as drastically until we stand right about at the constant line. My best guess is that we will probably dip below this line for a few years, before returning to our normal course of steadily increasing home prices sometime in the 20-teens.
So for 2010 I see a bump in home sales for the first half of the year due to the 2010 Obama Tax Credits, and probably a steady market for the second half of the year followed by a good numbers of foreclosures coming onto the market later in 2010.
All this adds up to a bit more competition for buyers in the spring, but more homes to choose from later in the year due to higher inventory and lower buyer levels.
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Great predictions Steve! What an awesome time for buyers to be looking to purchase real estate here in Minnesota. Buy low, sell high