Pardon the delay, but … Happy New Year!! I’ve been so busy eating, sleeping, watching movies, and then eating and sleeping again that I haven’t had time to wish you the best for 2010! Better late than never!
I have to tell you, I’m totally revived from the holidays, and I’m HIGHLY optimistic about the opportunities that 2010 brings us. I hope you are too! In the late 2000s, a bomb was dropped on the housing market. Not all, but most investors suffered. I truly believe that 2010 is the year to pick up — and profit from — the pieces.
So what exactly will 2010 bring? Drum roll please … Below are my 16 real estate predictions:
1. Unemployment will remain high throughout the year, causing the tough times to continue for many Americans. The result will be even more motivated sellers.
2. Many more adjustable-rate mortgages will reset, resulting in more motivated sellers.
3. For the most part, loan mods will not produce the desired effect, and those people will, once again, become motivated sellers.
4. All of these motivated sellers will be more willing than ever to accept a large discount on their homes. As a whole, they’ve finally realized that they can’t hold out for a full-price offer in this market.
5. More and more sellers will be upside down (owing more than the home is worth), so short sales will remain an highly valuable purchasing technique.
6. Extremely low interest rates will continue for at least the first quarter and possibly the first half of 2010. They’ll rise for the rest of 2010, possibly by a point or two. But they’ll still be low by historical standards.
7. Home values will bottom in many markets. (Yay!!!) Values will continue to decline — although at a much slower rate — in other markets.
8. The federal government will continue to try to prop up the housing market through tax credits and loan mod programs. Their efforts will prove to be a big and costly mistake.
9. In the second half of 2010, it will become clear that investors (from the U.S. and abroad) are providing — and will continue to provide — the demand that is needed to stabilize the market.
10. Just like in 2009, the two most popular forms of investing will continue to be wholesaling and buy/hold. They used to be wholesaling and rehabbing.
11. The rules for making money as an investor have changed, so education will be king. Only those investors who get educated on techniques that work in this market will thrive.
12. More investors will enter the market. Many got scared and took their chips off the table in 2009. Now they see the opportunity, and they’ll seek to profit from it in 2010. Some will use their recent stock market gains to fund their efforts.
13. Investors who have the big money or connections to big money will buy REOs in bulk. This type of bulk buying was out of favor by smart investors for several years. Now it’s back.
14. Wholesaling will continue to be the risk-free go-to technique. It’s amazing how wholesaling works so well in up, down, or sideways markets. Gotta love it.
15. Wholesalers will sell most of their deals to landlords, not rehabbers. So it will be more important than ever to show rental comps and cash-flow projections when marketing a deal.
16. Ten years from now, most Americans will look back on 2010 as the year they SHOULD have bought real estate. We have low home prices, low interest rates, and tons of motivated sellers. What a trio.
In case you’re wondering, my sources for all of these predictions are … From my own investing. From studying trends on MyHouseDeals.com. From talking to active investors, loan officers, and Realtors. From the Kiplinger Letter. (Great content on the economy.) From some of what the Fed is saying. And from a top banking executive who spends all his time studying the housing market and cleaning up his bank’s mortgage portfolio.
In summary, 2010 will be a bad year for motivated sellers, but a great one for investors. But it will be only as great as YOU make it. Fill your head with knowledge and your hands with action. That combo will be more important than ever before.
Until next time, Happy New Year!
Doug Smith
Real Estate Investor
Founder of MyHouseDeals.com