As such, we developed our "Top 10 Predictions for the 2010 Real Estate Market" and shared it with reporters throughout the country. As consumers have become more educated about real estate, we'd like to share our thoughts with our blog followers.
Among our predictions are an increase in sales volume, a decrease in home prices, another increase in buyers using the Internet to search and successfully find their next home, and more home sellers using Internet-based resources to price, market and sell their home without the expense of paying commissions to a real estate broker.
We feel that the behavior of the real estate consumers will continue to change in 2010. More real estate data and information is available through numerous online resources and consumers will rely more on the Internet than real estate agents to buy and sell their homes. Sellers will resist paying real estate commissions and will instead look to ‘by owner’ selling alternatives, especially as falling home prices are motivating sellers to retain as much of their home value as they can as they sell their house.
1. Overall homes sales – existing home sales and financially distressed homes – stabilized and slightly increased in 2009. Mortgage rates should remain low in 2010 and the extension of the first-time homebuyers tax credit should help the housing market. Prediction: In 2010, all home sales should see a slight increase in volume of 1-2%.
2. The median home sales price was $221,900 in 2006 and fell to $219,000 in 2007 and $198,100 in 2008. Median home sales decreased again in 2009 and will likely end up in the mid $170,000 range. Foreclosed properties and other distressed sales, with their severely discounted prices, helped to lower the median home price in 2009. Prediction: Distressed properties will continue to dominate home sales in 2010 and will keep pricing pressure on homes and they will fall approximately 4-6%.
3. According to the National Association of Realtors (NAR) 2009 Profile of Home Buyers and Sellers report, 36% of buyers found the home they purchased by first seeing it online and 36% of buyers found the home they bought through a real estate agent. The Internet and real estate agent as the sources for finding a home have trended in opposite directions annually since 2001, when 48% of buyers found their home through an agent and just 8% found it on the Internet. Prediction: In 2010, for the first-time ever, more people will find the home they purchase by seeing it first on the Internet compared to those who first learned of the home through a real estate agent.
4. Due in part to the $8,000 tax cut for first-time homebuyers, first-timers comprised nearly 50% of all home sales in 2008. Prediction: The extension of the $8,000 tax credit to June 2010 will attract more first-time homebuyers into the market and they will continue to be the most common type of homebuyer in first half of 2010.
5. According to NAR, 90% of all buyers use the Internet as part of their home search, up from 87% in 2008, 84% in 2007 and just 71% in 2003. Prediction: In 2010, more than 90% of all homebuyers will use the Internet to search for a home.
6. According to NAR, home sellers who sell their home “by owner” sell their home in six weeks while those who sell it through an agent sell the home in 12 weeks. NAR also discovered that the “by owner” seller achieves a sales price that is 97% of their asking price, while an agent-assisted seller gets 95% of asking price. Prediction: In 2010, “by owner” sellers will continue to sell their home quicker and for closer to asking price than agent-assisted sellers.
7. In 2000, there were 756,000 members of the National Association of Realtors. As the housing market boomed in the early part of the decade, its membership grew to a peak of 1.37 million members in 2006. People have left the profession as the market declined and NAR’s membership now stands at 1.13 million. Prediction: There will be fewer than one million real estate agents in 2010 due to increased competition for listings and as the Internet makes it easier for people to sell and buy homes without an agent.
8. Real estate agents have historically lowered their commission rates during a seller’s market and increased their rates during a buyer’s market. Prediction: Real estate commission rates have been approximately 5.2% the past couple years and will rise closer to 6% in 2010.
9. As home values have declined, more homeowners have realized that paying commissions to get their home sold decreases the amount they receive even further. Prediction: More home sellers in 2010 will explore other alternatives to paying commission and will choose to sell their home “by owner” to retain more of their home’s value.
10. Studies from Northwestern and Stanford universities have found that people who sell their home “by owner” are as effective as agents in maximizing the sales price of their home. Consumer Reports magazine found that “by owner” sellers get closer to their asking price than agent-represented homes. Prediction: More home sellers in 2010 will utilize Internet-based tools and information to compare recently sold homes and price their home more effectively.