What might shock the housing market in 2010

Journalists frequently ask industry insiders and outside watchers about their outlooks for
the housing market. In response, we typically hear what real estate professionals expect to
happen in the coming months.
Since we know that the economy likes to throw more than a few curve balls, we recently
asked around town what influential people in this business thought might be the
unexpected for 2010, the shocking housing surprises we all might be talking about a year
from now.
Michael Reynolds, The Concord Group:
“A decline in home prices. Despite good affordability metrics, uncertainty surrounding the
size of the foreclosure pool combined with the elimination of the federal home buyer tax
credit (April 30, 2010) may lead home prices downward. Banks have been stalling on the
foreclosure process with the intent of limiting available home supply for sale and propping
prices. Should banks ramp up on the foreclosure process in 2010, a glut of foreclosure
homes on the market would place downward pressure on home prices.”
Kristine Thalman, Building Industry Association of Orange County: “That the foreclosure
problem was not as bad as predicted in Orange County. We will also be saying, ‘I should
have bought that house!’ I also see a whole new way of financing construction, due to the
banks’ unpredictability and unwillingness to invest.”
Gary Macrides, Orange County Association of Realtors: “The loss of Proposition 13 tax
protections on commercial and multifamily buildings. At least three petitions in circulation
would create a split-roll tax assessment system. It could be devastating to business
owners, and may slam the door shut on commercial investment properties in California.”
Pat Veling, Real Data Strategies: “In- creased sales activity in the luxury property
segment. It is very possible that prices will fall far enough that average guys like me will
make a move on that coastal property we have wanted, but for which we were unwilling to
pay. As an active, hopeful buyer in Laguna Beach, I can tell you firsthand that livable
homes within a three- or four-block walk to the beach are being bought surprisingly fast
and at prices we thought sellers would not get.”
Mark Boud, Real Estate Economics: “The new-home market may rebound more
dramatically than the overall housing market. For example, new homes being offered on
the Irvine Ranch may absorb and appreciate faster than anyone anticipates – partly due to
the lack of competitive new-home inventory and partly due to a faster-than-anticipated
drop in distressed housing inventory. As early as January, there may be a bit of a new
home ‘frenzy’ on the Irvine Ranch.”
Anil Puri, Cal State Fullerton:
“Housing prices fall by 10 percent.”
Steve Thomas, Altera Real Estate:
“The increase in completed short sales, surpassing the number of completed foreclosures.
Over the past several months, there have been more closed short sales than foreclosures.
That fact does not make it a true surprise. Yet, it will be a surprise