2009 Predictions for the Housing Market in the MD Suburbs of DC

Posted by Ken Montville on December 21st, 2008

As 2009 approaches I’ve been looking into my crystal ball to see what might be coming down the pike. Here are my predictions:

The FHA down payment requirement increases from 3% to 3.5% decreasing the already small pool of moderate income home buyers in the market.
The $7,500 first time home buyers tax credit will become permanent and become a real tax credit – not the faux credit it is now.
Mortgage interest rates for 30 year fixed mortgage will drop to about 4.5% – give or take a ¼%.
Qualifying for a mortgage will still be difficult for moderate income folks with strict documentation requirements holding in place.
Banks will begin to work faster to allow “short sales” to actually sell since it will take lots longer to actually foreclose on a house and they’ll be losing money anyway.
As “short sales” and bank owned foreclosures sell, the housing stock will get smaller and prices will stabilize.
The media will begin to “talk up” the price stabilization story causing home buyers with pent-up demand to come into the market to buy houses.
The Obama Administration people will want to buy houses because they see a “good deal” but will need homes in “move-in” condition since they won’t have time to mess around with repairs or renovation.
BRAC (Base Realignment Commission) movement will start in 2009 and help the area around Ft. Meade. Bank owned and “plain vanilla” sales will be key. These folks won’t have the time to wait for short sales to work through the process. Price will be king. Fixer uppers will be OK.
Finally, 2009 will be the last “down” year. By 2010 home prices will have bottomed, the number of homes on the market will be smaller and people will have been saving their pennies for the down payment needed to buy a house. Rent prices and monthly mortgage payments will be roughly equivalent making home ownership attractive.