When it comes to predicting what’s in store for the real estate market in 2011, it’s very tempting to pronounce that the worst is behind us. There are perhaps as many arguments for this position as there are against it. But with so many key variables in question (unemployment, tax rates, and the future of the mortgage interest deduction to name a few) it truly is anybody’s guess.
We would rather deliver the news we think needs to be delivered than news perhaps wanted or hoped for (what some might call the difference between giving the ugly truth or the pretty lies). So, with that in mind: Nationally, we believe the total number of housing transactions will improve only marginally (2 to 4%) while average prices have a bit of softening left before hitting bottom in the second half of the year. Of course there will be fairly wide variances from one market to another, especially with respect to price. This less-than-enthusiastic prediction presumes we have bottomed out with respect to unemployment, that the tax compromise does indeed pass, and that the MID is not scrapped. The forecast gets stormier should any one of those variables not come up as expected.
For comparison, estimates from Fannie Mae and the National Association of REALTORS® are as follows: