New Mexico Housing Market Update 2010 Year-end

Review

As the year winds down and we review successive housing market updates we arrive at the realization that predictions of recovery of our real estate market in 2010 may have been premature. The home buyer tax credit along with low interest rates kept the market going especially with respect to the sale of lower priced homes. But the tax credit stimulus was not sustainable although interest rates remained low, and prices kept falling as inventory increased.

More restrictive lending practices made it increasingly difficult for buyers to qualify for loans. Also, job losses, income reduction, and underwater loans leading to short sales and foreclosures all continue to have an effect on the real estate market not just in New Mexico but across the nation.

Revised recovery projections for New Mexico, based on favorable reports of progress in states we trailed into the downturn, are now set to begin mid 2011. It is also predicted that process will be slow and it may be a few years before we see significant improvement in sales volume or price increases.

Given the new scenario, the question then becomes, how best can individuals prepare for the real estate journey of the next few years? Recommendations abound. The ones most in alignment with my philosophy are the views expressed in CNN Money by Amanda Gengler. How we face and manage the upcoming year depends on our circumstances as seller, buyer, investor, underwater homeowner, or home owner with no immediate relocation plans.
Recommendations
1. Seller: If you are a seller and you don’t have to sell, sit tight for a few years. If you do decide to sell, price your home for quick sale, which means pricing it just below market value. Otherwise, you may find yourself chasing the market downward as prices decrease and you end up selling several months later at or below the price you could have received when you first put your house on the market.

2. Buyer: If you are a buyer and you find the house of your dreams, don’t try to time the market. You may lose the home to someone else and if prices don’t go up, interest rates may and will set off any savings you may make by a lower price for the home.

3. Owner: If you are an owner who has no plans to move and are staying put for the long haul, consider refinancing. These days 1 point less than you now pay on your mortgage is considered worth your while to refinance. I know homeowners who not only refinanced for a lower rate but for shorter terms of 15 or 10 years for significant additional savings.

4. Underwater Homeowner: If you are struggling to keep up with your mortgage payments, the value of your home or other circumstances don’t allow you to refinance, and you are unable to sell it for enough to pay off the mortgage balance, you still have choices. Avoid the temptation to remain passive and do nothing. Call your lender and seek to renegotiate or restructuring your loan. Be careful of scams. Go online to www.Hud.gov to learn about programs available to help you negotiate a solution and avoid foreclosure. Foreclosure is not your only choice.

5. Investor: If you are an investor, bear in mind that the current economic situation will not last forever. The availability of short sales and foreclosures will ebb and flow and may not always be the best deals. According to the economists, the recession officially ended back in 2009 and we are simply waiting for the economy to catch up.

Looking Ahead

Here in New Mexico, if we look hard enough we might just be able to see the beginning glimmer of the light at the end of the tunnel. I get reports of several states including one of our neighbors to the south that are in strong recovery with strong resale and new housing starts. That state had a big housing bubble that burst several months before we were even aware of bubbles, let alone a downturn. If they are thriving again, our full recovery cannot be too far behind.
Eloise Gift
Gift Realty NM