One of the hardest-hit industries which felt the brunt of the effect of the financial crisis over the past few years is none other than the real estate industry. The economic crunch has caused job loss to heads of families who are still paying their mortgage, causing most homes to be foreclosed. Development of both commercial and residential real estate properties have been put to a stop – and real estate agents barely had any leads to follow up so that they can close a sale and earn funds for themselves.
Now that it seems as if the worst of the crisis is over, are things looking brighter for the real estate industry this 2010? Read on to find out.
Factors Affecting the Status of the Real Estate Market for 2010
To have a deeper understanding of exactly how the real estate markets in countries from around the world will perform for the year 2010, it helps to have a background of the factors affecting the outlook. If you’re a professional who is involved at any scale with the real estate market, your goal should be to apply investment strategies that will deliver optimum results.
To give you an idea about how to do just that, take a look at the following list of factors which are bound to affect the real estate market for the coming year:
1. The mortgage market and the loan financing industry.
Looking back, it is actually the mortgage market and loan financing industry which contributed to the downturn that the real estate industry in general has suffered. This is especially true during the height of the financial, when it seemed as if one real estate market after another came tumbling down and there’s an almost domino-effect passed on from one state to another.
Another contributor is the lacklustre performance of those in the industry when it came to excessive lending or lack of requirements for credit checks. As a result, more and more homeowners defaulted on their mortgage payments, putting down further the real estate industry.
Due to the increasing number of homeowners who required financial assistance with their mortgages, banks had to offer reduced interest rates. In relation to the prospect for the real estate industry in the following year, it is expected that interest rates will remain low until the middle of 2010. However, there will be a reduced number of potential buyers who can qualify for mortgage financing due to the financial problems experienced during the height of the financial crisis.
2. The law of supply and demand.
Another factor which would affect the future of the real estate industry this 2010 is the law of supply in demand. For this year, a slowdown of new real estate development projects is expected.
To counteract this effect, the locations which have an excessive supply of houses for sale are expected to have a longer recovery time. However, there is less competition so the prices in these areas will remain relatively low.
On the other hand, if there is an equal rate in the demand and supply of real estate properties, investors may just find themselves enjoying long-term return potential for the investments that they will put their money on.
3. The benefits that real estate investors and buyers will get from having a “buyers’ market”.
As you may have already gleaned by now, it’s a buyers’ market out there. If you’re considering moving out of your home to buy a new one, you will be able to negotiate great deals with real estate agents.
Meanwhile, those who are planning to invest in a real estate property so that they can enjoy long-term benefits will be glad to know that they can turn the market around – in such a way that they can benefit from negotiating a deal under a sellers’ market condition.
4. The returns from long-term investment plans.
For 2010, the keyword is long-term investment – whether you’re looking at things from a buyer’s or a seller’s perspective. Both the emerging and established markets will benefit from long-term investment scenarios. This is because this type of an investment scheme involves the least risks, considering the current market conditions.
As such, it is not really advisable for investors to put their money on short-term investments which are highly unlikely to be successful.
5. The way that buy-to-let interest rates are expanded.
First, what are buy-to-let interest rates? Fixed, trackers, offset and flexible are the different types of buy-to-let rates. The most common is fixed, where if you sign up for a 5% rate, for example, it will remain the same. For 2010, the buy-to-let market is expected to significantly increase as a result of increased investments in this field.
6. The locations of the real estate investments – be it commercial or residential.
When you’re a commercial real estate investor or residential property buyer, the location is naturally the most important thing that you will take into consideration. If you want to optimize your investment returns, do your research to ensure that you are going for an ideal location where the local demand, supply and letting market saturation are also looked into.
Is the Real Estate Industry Really On Its Way to Recovery?
By taking the aforementioned factors into consideration, you will have a much better chance of succeeding with your real estate investment for the year 2010. As a general rule, local real estate markets which are least affected by the previous years’ downturn will experience a significant growth pattern. On the other hand, regions which have been hit the hardest should take stronger steps to avoid continuous decline.
Given enough time, worldwide real estate markets should recover enough from the damage wreaked by the financial crunch of the past few years – and slowly but surely be on its way to recovery.
Let the Mark Z Home Selling Team help you find your next dream home… Are you looking for Bank Owned Homes in Michigan? How about Commerce MI Real Estate or homes in Oakland County. For more information you can contact us at 248.937.1337.
Article from articlesbase.com
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