The Texas Forecast: What Will the 2010 Housing Market Look Like?

With concerns about the state of the economy still floating around in the national news, it can be difficult to say just what all the hullabaloo has to do with the local housing market. 　

There is good news and bad news. The good news is that Dallas has fared better than most of the rest of the country, as one of three of the top 10 cities to show gains in the federal pricing index. So the state of the market is better than the dismal national reports suggest. This is largely because Dallas's housing bubble was not as bad as those in other cities, such as Las Vegas and Detroit. The current foreclosure rate is half the national average.　

On the other hand, some national trends apply to as much to Dallas as they do to the rest of the nation. The percentage of mortgage delinquency, often used to help predict the number of ensuing foreclosures, is at a record level: over 10% both locally and nationally. More than half of those are in "serious delinquency", or over 90 days behind on payments. 　

Mortgage rates have remained low in part due to effort on the part of the Fed to keep them down. But the Fed's have been a dominant buyer in the mortgage securities market and they are pulling out March 31st, which could result in spike in mortgage rates according to Freddie Mac. If there is a spike in the rates and the economy weekens the Fed's have stated that they are leaving the door open to extend the program. For the thousands of new first time homebuyers rushing to find a home prior to the end of the first time home buyer rebate program, they could see a window of higher rates in the first few weeks of April due to the bond market reaction. If buyer interest is sparked by recent developments, this may also trigger a surge in the mortgage rates as demand for credit rises. 　

The other sign to watch is how will the housing market react to the end of the first time home buyer program. Will we see a slow down in May? Will we see the market return in the summer buying months for families relocating, buying up or sizing down during the crucial "let's get moved so the kids can be in ready for the new school? Will the national home builders, who are building now in the affordable priced homes, slow down due to expectations of market slow down from first time home buyers? All I can say is wait and let's wait and see.

We are recommending our investors to hold up if they are looking at housing under $250,000 price point due to all the heavy competition that is out there from the first time home buyers. There will be a slow down and banks will be more motivated to look at the lower offers after April 30th. So investors, be patient and get ready for let's make a deal.

Let's wait and see what happens to interest rates and look back at this blog during the first few weeks of April. Let's wait and see what happens to the market reaction for home sales in May. I know in the Dallas market many of the foreclosure hitting the market in the under $250,000 price point have been hitting closer and closer to market price -vs.- the market entry price that were hitting early to mid 2009. We might see a change and we need to get the crystal ball ready because we are all waiting to see.