Thursday, November 19, 2009

Double Digit Growth in 2010???

So I was reading this morning that Fannie Mae is forecasting "predicting" an 11% growth in home sales for 2010.

If true . . . this is good news because this has been a deep and long recession and there has been a lot of negative news for at least two years. From what I see in the market make it hard to believe the Fannie Mae economists that are projecting sales of new and existing homes will jump 11 percent next year and that national home prices will stabilize, remaining essentially flat.

The second I can believe that prices will stabilize and will be flat for a year or more, but 11% growth with very little inventory is hard to understand. The inventory will have to come from banks releasing foreclosed holdings and stimulus buyers trying to step up. This is all reliant on financing becoming more accessible for higher priced homes.

Even more optimistic is the mortgage guarantor's monthly housing forecast with sales of existing homes growing by 10 percent, to 5.46 million and new-home sales are expected to rebound by 24 percent.

Our little Alameda market has seen very little movement over the past three months in inventory but sales have been brisk in the same period. November already has 18 sales and is on pace to exceed 2008's 32 sales.

Sales on the Island (January to October) are pacing slower this year compared to last. So to see a big change locally is difficult. The one unknown is the change in the tax credit that now runs until April 30 to be in contract.

The first-time homebuyer tax credit spurred national home sales in the third-quarter, but I am not sure that the boost in sales are sustainable without the government assistance. Job loss will continue to put pressure on home sales, fear of job loss will keep many out of the market. It is my belief that housing will rebound when jobs come back.

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