Getting Ahead of the Market in 2011

photo courtesy of homebuyinginstitute.com

As 2011 kicks off, there’s ample reason to feel upbeat about the New Year.  Buoyed by the strongest holiday spending since 2006, retail sales will end 2010 on a high note.   Meanwhile, corporate earnings are up, there’s growth in the manufacturing sector; and the number of people applying for unemployment benefits fell last week to the second-lowest level since July 2008.

Investor confidence is also up.  Since the bull market began in March 2009, the S. & P. 500 has risen more than 86 percent; with a strong year-end surge pushing it up 20 percent since September alone.   Consumer confidence is at its highest level in five months, suggesting that people not only feel better about the economy but also more secure in their own circumstances.  The extension of the Bush tax cuts will also give a welcome boost to everyone’s discretionary spending.

Locally, foreclosed properties will continue to challenge the pace of our housing recovery.  Still, with much the same selling environment present throughout 2010, the agents of Michael Saunders & Company managed to finish the year with unit sales up 30.3% and dollar volume up 23.1%, versus 2009.  By comparison the overall market was up 3% in units and .5% in dollar volume.

Forecasts from such closely-watched sources as Moody’s, Standard & Poor’s, Wells-Fargo, the Mortgage Bankers Association, Forbes, Morgan Stanley, Bloomberg News and the Wall Street Journal call for an increase in home-buying activity during 2011, if only a modest one. The past few years have been fraught with tough economic lessons, prompting most of us to save more and spend judiciously.   The world goes on, however; and in a Florida, whose on-going growth has just earned it two more seats in the House of Representatives, new arrivals (along with those trading up, down or sideways) will help further diminish our inventory of properties.

Still, with foreclosures keeping these inventories out of balance with demand, prices nationally could recede on average by as much as 6 – 9 percent in 2011.   Whether or not they do in Florida, remains to be seen.  But one thing is known for sure.  Local home prices are at levels not seen since 2001, well before the housing bubble sent them soaring.   At this point, the savviest buyers are paying closer attention to what the home will cost over the life of the mortgage; as a modest up-tick in interest rates could potentially blunt the benefit of any additional price declines.

Mortgage rates should remain historically low—for now—but are forecast in many circles to increase between now and the end of the year. For this reason, buyers should think about securing a mortgage closer to the beginning of 2011, rather than later on in the year.

Meanwhile, if your goal is to sell your home in 2011, here’s why you should think of listing it within the next 90 days:

– Interest rates have spiked recently, jumping over ½ point in the last several weeks.  Such volatility is causing many buyers to act now for fear that rates could climb later in the year.  Plus, if rates do go up, the number of buyers who qualify to purchase homes at each price point—including yours—will diminish proportionately.

– If your goal in selling is to trade up to a larger, more deluxe or even smaller property, the time is now to take advantage of the widest section of buying opportunities currently available at below-market values.

– Now is the busiest time of year in our market, with seasonal buyers in town actively combing the market for the unprecedented values they’ve been hearing about all year long in the local, national and international media.  That means MORE potential showings to MORE eager and motivated buyers.

– Whatever your true reason is for wanting to sell, once you become a buyer again you too can enjoy today’s unprecedented values.

The best environment for buying or selling in 2011 will likely occur between now and the end of March.  Talk to an agent from Michael Saunders & Company to explore how you can maximize your buying or selling opportunities by acting now and getting ahead of the market.

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