9 Tips for 2009: Navigating the Frederick Real Estate Market

As Karen and I watched the ball drop in Times Square last night, from the comfort of our couch, we couldn’t conjure up many warm sentiments of the passing year.  It really wasn’t the best of our 23 years together.  Oh well, we clinked our glasses of Asti Spumonti together and enthusiastically cheered, “Here’s to 2009! It can only get better from here!”

We eagerly look forward to a better year for Frederick Real Estate, and see several positive things happening in the Frederick Market: 

1.        Foreclosures will continue to be a steady portion of the Frederick Real Estate Market.    First-time buyers and non-contingent 

        buyers will continue to take advantage of some great deals.

2.        I didn’t think I’d ever see interest rates below 5%, and buyers with good credit and some cash will take advantage of these rates

       throughout the first half of the year, at least, and maybe further into ’10 if interest rates stay low.

3.       First-time homebuyers will take advantage of the $7500 tax credit.  This tax credit is offered to homeowners who purchased their

       homes between Aprl 9, 2008 and July 1, 2009.  NAR is lobbying to extend this credit further than July 1.

4.       We may see some Federal and State intervention regarding Short Sales by the middle of 2009, it is on the agenda for Congress to come up with a set of standards and guidelines to clarify the process.  Right now, the process is different with each lender, and to me, the lack of standards and continuity creates an environment which seems like a lawsuit waiting to happen.  If this is accomplished, it will certainly diminish the number of foreclosures and help distressed homeowners get out of the burden of mortgages they can’t afford, while still offering below market housing to buyers.

5.       As the deal-taking continues, we may see a decline in inventory, depending on how many new foreclosures come on the market.  That of course depends on the success of the attempts to slow down new foreclosures, ie. Loan modifications, short sales and other bailouts for distressed homeowners.

6.       Statistics are showing that more sellers are getting realistic about their asking prices, and those who aren’t compelled to sell are taking their unsalable homes off the market.  This, combined with the deal-taking could bring a lower inventory and absorption rate, therefore leveling the market, and hopefully contributing to the stabilization of prices.

7.       We will continue to see underwriting practices circa 1992.  A buyer needs a steady job, decent credit, and a little money to get a loan.  We hear that credit is tight, but that is a relative statement:  compared to the first half of this decade, when anyone who could pass a mirror-fog test could get a loan, what we are seeing now is just good common-sense business again.

8.   Buyers will be more frugal this year, with less emphasis on luxury and more on the practical.  We are seeing a trend toward Urbanism, living closer to jobs and cities are being revitalized.  Smaller, energy-efficient homes will be more in demand.  Green renovations are leading the home improvement market, as homeowners are more conscious of energy costs.

9.   We believe we are seeing the bottom of the market here in Frederick.  Several signs point that direction:  First-time homebuyers are entering the market in numbers again, after being conspicuously absent for the last few years.  First-time buyers are necdessary for any significant recovery.  Another sign is the fact we are seeing multiple offers on housing that is priced well.  This is one part of establishing the bottom of the market.

The bottoming of the market is neccessary before we can talk about any recovery.  But remember, this recovery is not going to mean we start seeing those 20 % per year increases in value.  A normal, healthy real estate market will bring 3 to 5% yearly increases.  We think it might be a few years before we see a healthy market again, or however long it takes to get through these foreclosures

2009 has a lot of promise for the Frederick Real Esate Market.  Call us for a personal tour of homes for sale in Frederick and Washington Counties.