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6 Changes in Real Estate for 2011

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6 Changes in Real Estate for 2011

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We will see some definite changes in real estate during 2011.  Some good, some bad for sellers.  Some good, some bad for buyers.  As the economy begins to improve due to consumer confidence, the real estate market will rebound.  It always does.  Here are some of the changes we can look forward to this year:

1.      Higher interest rates.  Yes, they couldn’t stay at historic lows forever.  After reaching lows around 3.5% in 2010, the interest rates for borrowing money to purchase a home can only go up.  Is it possible to see rates up around 8%?  Possible!  Expect them to definitely get up to at least 6%.  This means it will cost buyers more to buy a home.  Buyers need to get out and buy a home sooner, than later.

2.      Higher down payment requirements.  With the devastating loan programs available during the early to mid 2000’s, and now the large amount of FHA backed loans, expect down payment requirements for buyers to increase.  Even FHA loans may increase their low down payment requirement (currently at 3.5%).  Conventional loans will continue to push for 20% down as lenders look for more stable investments.

3.      Lower backing of large loans.  Again, lenders will be looking for smarter, more stable investments and will be funding less of the jumbo loans.  Plus, current buyers are now looking for smaller, lower priced, homes.  It’s a trend that will be around for a while.

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4.      Fewer fixed rate loans.  As interest rates can only go up, and lending requirements continue to be too tight, expect to see lenders open up to more adjustable rate mortgages.

5.      Fewer homeowners.  Reports are already out that home ownership across the country is lower.  Was sitting around 69%, now at 66%.  Possibly get down to 62%.  Less buyers can get loans, plus certain demographics, that are growing in percentage of the population, have a history of less home ownership.  Owning a home is still the American dream, increases the net worth of owners, provides exceptional tax benefits, and increases community involvement.  And don’t forget it is still one of the most valuable investments available.  Home ownership must continue to be a priority for the economic health of our country.

6.      Improved stability.  The country’s economy is already more stable than we saw in 2010.  We will see how the unrest in other parts of the world will affect our economy, but volatility should be less.  Due to the dramatic changes put in place over the past year or so, we should experience better stability for all.

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By: on March 26th, 2011 Category: Uncategorized