The 2009 Housing Market Outlook: Is There A Silver Lining?

Almost all industry experts believe that the housing market will continue along the same path as it did for most of this year. However, the outlook for 2009 does have a few bright spots. Although the market may not dramatically turn around, there are positive aspects going forward.

Interest rates will more than likely remain stable. At the end of October, the Federal Reserve once again cut the benchmark interest rate—this time to a four-year low of 1.0 percent. The Fed has been keeping a close eye on the rates and has indicated that more cuts to the prime rate may be coming in 2009.

Great deals can be had for potential buyers in 2009. Although the current slide in housing prices may not be over just yet, potential buyers can find quite a few good deals compared to this time last year. With home prices down over ten percent nationally, buyers are certainly in the driver’s seat.

For those with good credit, there are options. Lost in the hubbub over the credit crisis is the fact that borrowers with good credit still have viable options in terms of buying or refinancing—and borrowers with great credit have as many options as ever. Although the days of 100% financing are over, good credit is still the key to mortgage flexibility.

Housing inventory may return to “normal” levels by the end of 2009. Because new construction has slowed considerably and fewer new listings are appearing on the market, some experts believe the supply of homes on the market may begin to drop in late 2009. Average time on the market has been right around ten months for most of 2008. “Normal” average time on the market is considered to be six months.

New legislation and other programs should make a difference. New legislation may be the wild card in 2009. Recent legislation—such as the Hope for Homeowners Act and the injection of capital into the financial system—has yet to be fully implemented and the impact on the housing and mortgage markets could be significant.

The economy may begin to stabilize sooner rather than later. According to many economists, the economy will begin to grow again as early as the second quarter of 2009. As a cornerstone of the economy, the housing market should benefit from any upswing—especially if consumer confidence grows along with the economy.

Of course, the outlook for 2009 isn’t all peaches and cream. However, it’s certainly not too much of a stretch to predict that the housing market will—if nothing else be more stable in 2009 than it was in 2008. ∆