1. Rates of Mortgage will Stay Low. While mortgage rates have been inching up in recent weeks, economists predict they will remain in the 4.5% to 5% range for 2011 and perhaps rise above 6% in 2012. Even though these rates are increasing, they are still well below average mortgage rates a few years ago. As consumer confidence rises and the economy improves, low mortgage interest rates will add to the affordability of homes.
2. Lenders may loosen standards. Lawrence Yun, chief economist for the National Association of Realtors (NAR), says overly tight restrictions on loan approvals have hurt the housing market. NAR is lobbying lenders to loosen their standards and the expectation is that as the economy improves, credit will become more accessible.
3. Tax cut extension could lead to faster recovery. Some economists are revising their predictions about economic growth and increased employment as the government extends tax cuts and unemployment insurance benefits.
4. Americans still want to be homeowners. A recent Fannie Mae survey revealed that more than half of Americans still believe in the overall value of buying a home, and that 66% believe buying a home is a safe investment.
5. Homebuyers are looking for long-term ownership, not a fast profit.Homebuyers today are serious about why they want to buy a home, so while they are slower to choose a home, they are also more likely to actually buy rather than just keep looking. (Real estate can provide diversification and a hedge against inflation. Find out why it works. Read Can Real Estate Stabilize Your Portfolio?)
6. Home prices are expected to dip again.While this may not sound like an indicator of a recovering market to homeowners, lower prices may induce more renters to become homeowners.
7. Builders will start building again.The last few years have been slow for homebuilders, yet they still own land that is waiting for development. As the economy begins to recover, builders will start building again. Not only will this excite buyers with pent-up demand for a brand-new home, but it will also add jobs in each market.
8. Inventory of all types will increase.Sellers who have been waiting for the market to improve may not be willing to wait much longer, so buyers will find more existing homes ready for purchase. Competition from foreclosures and new homes will add to the pressure to keep prices low, which should be a good deal for buyers.
9. Homes will keep shrinking.Home are getting smaller, making them more affordable and easier to maintain. Buyers who have been afraid to step into a large home may be more willing to become homeowners of a more manageable property. (Find out how a smaller home can reduce expenses in Downsize Your Home To Downsize Expenses.)
10. There will be more opportunities available for cash buyers and investors.Real estate investors and others with the funds available for an all-cash purchase have been an increasingly larger pool of buyers in 2010, and this trend is expected to continue in 2011. These buyers can quickly snap up inventory without waiting for a loan approval, thus increasing the number of home sales in individual markets.
This article is based on investopedia view, So if you have any plan to invest a new home or real estate, I hope that information can help you as well
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