lake norman real estate

Lake Norman Real Estate Predictions for 2010

Lake Norman's Crystal Ball

 Truthfully,  2009 was a pretty easy year to predict real estate trends in our Lake Norman area. (See my 2009 predictions).  Prices came down, foreclosures and short sales dominated our market, new construction ground to a screeching halt putting many of our local builders out of business, and lenders made everyones’  lives extremely difficult. Yes, it was a tough year for home sellers and home buyers.

However, looking forward in 2010 I am not seeing a lot of black and white but rather a medium shade of grey.

For our Lake Norman real estate market 2010 will be a turning point.  The question is, how bumpy will the road be, how far down the road will we hit the turn, and will it be a gentle, hardly discernible curve or a pronounced change in direction? 

The Big Picture:

To a certain degree, our Lake Norman housing market’s ability to begin to stabilize will depend on the national financial policy makers.  Our national financial uncertainly makes it extremely difficult to make solid predictions for our local market.  Here are some of the major issues that will play a significant role in our housing market this year:

  • At the end of march, the Federal Reserve will end its $1.25 Trillion program backing the mortgage market and helping to keep interest rates low.
  • FHA is currently working on legislation to tighten their underwriting standards although progress is being made to modify and soften their original requests.  This tightening was initiated by a need for capital reserves due to losses FHA has absorbed since the recession began.
  • Only a modest rebound in housing starts is expected.  Builders who have survived are still finding it nearly impossible to get loans for new projects and spec building is almost not existent.
  • The homebuyer tax credits will end April 30th – June 30th.
  • There is expected to be another wave of  resets of adjustable and interest only loans, especially on jumbo loans, which means sharply higher monthly payments for those homeowners.  This may trigger another wave of shortsales and/or foreclosures.

Regionally:

Our Lake Norman housing market is also going to be impacted significantly by regional economic components, especially jobs.

  • North Carolina’s population growth was the third highest in the US  according to the Charlotte Business Journal.  Lake Norman is still a destination for people throughout the US.  While many of my out-of-state buyers have had to delay their moves here, very few have actually canceled them.
  • Jobs play a huge role in our recovery.  The jobless rate in North Carolina started to lessen in November however unemployment rates in Mecklenburg and Iredell Counties remain higher than the state average.  North Carolina pundits seem very mixed in their economic vision of 2010 but they do seem to agree that unemployment has peaked and that we will see improvement by the end of 2010 if not sooner.  But everyone agrees that we must see job improvement before we see any significant change in our housing market.  

My Predictions:

  • Bargains will continue to drive the market.  More and more homebuyers who have been sitting on the fence will realized that these bargains, once gone, won’t necessarily be replaced so they will be more confident and motivated in 2010.
  • A year of  foreclosures and short sales.  Sellers who have been hoping to sell at a price that allows them to at least break even are going to run out of time. We will continue to see active listings slowly evolving into short sales or foreclosures.
  • Shadow Inventory?  One of the biggest questions I have is just how many Lake Norman homeowners are either waiting to sell until they see a turn in the market or have withdrawn their homes from the market (which accounts for our drop in inventory) while planning to bring them back on the market once they see signs of improvement.  If, just when our inventory of homes gets down to a good number (6-8 months of supply), a large number of sellers who have been waiting  jump into the market, then we will again face high levels of inventory and a second round of a buyers market.
  • A year of stabilization more than recovery is what most everyone is saying throughout the country.  Personally, I don’t think it will be an exciting year with significant changes but rather a slow, methodical road towards recovery.  2010 may hold some surprises but for the most part it will be a year of righting the ship and preparing to sail slowing forward in 2011.

I would love to hear your thoughts and predictions. Please leave a comment!

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5 thoughts on “Lake Norman Real Estate Predictions for 2010

  1. Priscilla says:

    Diane – Your blog started me thinking about the future of real estate.
    Personally I think we licensees need to change our vocabulary. Recovery means to get back to where you were. We will not see 2004, 2005 or 2006 ever again. So what will the new normal look like? That is the million dollar question. Perhaps 2002-2003 sales, prices, number of licensees, etc., but we don’t know what this crash has done to our psyche, and therefore to the willingness of the people to get back into the home ownership game. With savings gone, job growth almost non-existent and no rosy glow on the horizon, where will the brave buyers come from to buy the huge inventory of homes on the market?
    I know we all want the public to start believing and start buying, and therefore our positive note on what’s coming in the near future. But I think we need to be focusing on ourselves and our part in this buy/sell process. We have to go back 10 to 15 years as real estate agents to get to what we have to be now. We need to change what a real estate agent is. We have to develop relationships, prove our worth as an advisor and learn to always put the consumer first. We lost a lot of that in the glitter of quick sales, and the public doesn’t think much of us because of our actions. So, what is my point? We need to stop telling buyers to buy and sellers to sell. We need to stop thinking about how much money we’re not making now. We need to improve our knowledge of laws, contracts, economics, agency and personal relationships. And we need to start asking the public, “How can I help you?” and start assuring them that we are here to serve them and protect them. We will never “recover”; we will be forever changed. Hopefully, for real estate licensees, it will be to a more caring, more service oriented business of helping people successfully accomplish the largest transaction of their lives.
    Priscilla Senecal

  2. I think you’ve hit the nail on the head. “Cautious Optimism” seems to be the term for this new year. I think it will be a slow turn and will depend a great deal on the employment picture. Good luck in 2010

  3. Mason Boswell says:

    I will take the flip side and note that almost every one of your “Big Picture” bullets is very negative for home prices. Thus, the conclusion I come to right now is that 2010 will be a year of continued decline, and we will not see a recovery take hold yet. I also don’t think unemployment is done climbing, and we may well see double current levels (i.e., 20%). The consumer is simply pushed to the wall on debt and we are still running on the fumes of a series of government plans to make things appear as usual. However, once the government plans run out of steam, if consumer spending hasn’t turned around we will be in real trouble. Note that during the Great Depression the first year showed the biggest decline, but a 10 year steady decline followed. I have yet to see any reason for optimism that a recovery is near.

  4. Mason, I agree with you for the most part. All of my bullet points could have a very negative impact on our Lake Norman housing market as well as the national housing market. And, jobs are going to play a huge role in 2010. While I predicted that 2010 will be a year of stablization, as I said, our market will be driven by foreclosures and shortsales. The more distressed properties that are taken out of our inventory, the better for our overall stability. What I have been experiencing for the past 6 months, is an uptick in sales because buyers are now willing to step in and buy great bargains rather than wait for the entire market to swing. In my opinion this is an important shift. If buyers continue to step forward when they see really good properties at bargain prices our local inventory declines. It is almost as if our Lake Norman market must be assessed on a property by property basis. Overall, our market is struggling and will continue to do so for years. However, more buyers are taking advantage of opportunities that arise now that our distressed properties prices have gotten so low. I sold several great waterfront properties this past several months in the mid $600,000s that were originally purchased for over $1 million. I guess its baby steps and progress but not a big picture recovery. Thank you for your comment!

  5. Priscilla, Interesting that you turn the focus to Realtors. You are exposed to our local Realtors probably more than most anyone else. I couldn’t agree with you more. We are seeing so many agents leave the business that flourished during the good times but don’t have the basic skills or knowledge to succeed. You and I have been through recessions and still embrace the old school values and ethics that so many agents simply don’t get. For me, my focus has always been and always will be entirely on my clients best interests. I hope, as you do, that what comes out of this is a significant raising of the bar for Realtors in our Lake Norman area! We should have coffee again soon!

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