The 2011 Real Estate Market Outlook

Nationally, the housing market had its ups and downs in 2010, with a few more downs than ups. However, 2011 should be a good year if you’re looking to buy a new home or if you’re contemplating a refinance—and if you’re considering selling your home, there may be light at the end of the tunnel. Very low interest rates, good home prices and a better outlook for the national economy by the end of 2011 could add up to a better year in the housing market.

Keep in mind, though, that all real estate is local. Market conditions in your specific area may not reflect national or even regional real estate trends. To get the best information on your particular market, talk to your real estate agent.

Interest Rates. The big story in 2010 was the historically low interest rates. For almost the entire calendar year, the rates on a 30-year fixed-rate mortgage were well below the 5.0 percent mark. Lately, the interest rates have been climbing from their record lows late in 2010, but the Federal Reserve is expected to keep its primary mortgage index rate low for the foreseeable future, so interest rates should continue to be low—around 5.0 percent—throughout 2011. For those who wish to buy or refinance in 2011, this is good news. Nationally, the low rates will certainly help fuel any growth in the housing market over the next year.

Home Prices. Most experts believe that home prices—at least on a national scale—have not hit bottom yet. This may not be the best news for sellers or homeowners concerned about their home equity, but homebuyers will be able to find quite a few good deals in 2011. Home prices may drop a bit more—possibly up to 10 percent—as we get deeper into the new year, but pockets of gradually rising prices have begun to appear in several markets that have had a steady price decline over the past two years.

The Economy. The health of the economy is certainly the biggest wild card in the housing market. Unemployment has been a huge drag on the housing market, but many experts predict that the national unemployment rate will finally stabilize and possibly start to go down towards the end of 2011. Sellers have had the toughest time in the past couple of years, but that may change by this time next year. If the economy does indeed improve, sellers will likely reap the benefits.

Of course, with the current economic conditions and the still-lingering problems with foreclosures, the outlook for the housing market in 2011 isn’t as bright as it could be, but we may see more improvement in the market as the year progresses. ∆