After a roller-coaster year like the one we've just been through, our viewers told us they want to know what's going to happen in the real estate market next year. For a glimpse at what the future might hold, we sat down with real estate expert Barbara Corcoran for her take on what buyers, sellers and owners can expect in 2011.
The State of the Market in General
Anyone who bought or sold a home in 2010 can tell you that it was a challenging year for real estate. Corcoran described it as "choppy" and more than anything else, "confused."
Looking ahead, however, there are a couple of wild cards out there that could make the real estate market in 2011 look very different. First, says Corcoran, if the job market improves, we will see an immediate improvement in the residential market. So that's good news for sellers.
Next is a government incentive similar to last year's first-time homebuyer tax credit. "If the government comes in with some great incentives, as they did last year, first time homebuyers will get a jump up in the real estate market as well," Corcoran says.
Lastly, Corcoran points out that the health of the real estate market is at least somewhat in the hands of the media. "The more that's written about how terrible the housing market is, the more apt people are to sit back and do nothing," she says.
Advice for Buyers
We next asked Corcoran if she had any advice for a buyer who is planning to purchase a home in 2011 and might be a little bit nervous about the uncertain state of the market.
"Of course anyone in this market with so many mixed signals is nervous about buying," she acknowledges. "But my advice would be to not wait. If there is one thing I've learned about this real estate market, it is that it usually takes a very long time to unwind but once it decides to turn around, those prices will move up very quickly and you'll just be joining every other Tom, Dick and Harry out there bidding on the same house."
Corcoran also points out that now is a particularly good time to buy since interest rates are so low. Just five years ago rates were up at 8 percent. Now they are down at 4.5 percent. "That is a phenomenal savings and people don't realize it," she says.
Unfortunately, Corcoran doesn't expect many buyers to jump on this opportunity. "What happens in the real estate business is that people are more comfortable buying when everyone else out there is buying and overbidding on property," she says. For some reason, folks feel like they are making a smart decision if they are moving along with the herd.
Advice for Sellers
What's Corcoran's best advice for sellers in 2011? They need to do a couple of things: First, they should be thinking about pricing their home for exactly what it's worth. The strategy of pricing a home high and letting buyers make a lower offer can backfire, she warns.
"In today's market, it takes seven bids from buyers to get one acceptable price," Corcoran says. "If you haven't gotten seven bids, you have no hope of selling a home. So you want to price it right against the bone so people are willing to bid."
Her second piece of advice for sellers is to realize you are in competition with your neighbors. "They are competing with you to sell their house, so you had better make sure that yours is prettier than theirs," she says.
How do you do that? You make the inexpensive improvements that buy you some "fashion sense." You even consider staging your home and renting furniture. You do the little things that people notice--"whatever you need to do to make your house compete best with the neighbor that is selling his home," she says.
Will Home Prices Rebound in 2011?
Some would-be sellers are sitting on the sidelines now and waiting for home prices to return to their pre-bubble prices. We asked Corcoran if that's a wise move and whether home prices will rebound any time soon.
The good news, she says, is that she wouldn't be surprised if prices returned to the same level--and then push even higher--within the next three years. "Real estate markets can recover much faster than they can fall," she says. "I've seen it time and time again. And so miracles can happen."
Of course, no one knows for certain what the future holds. Even data can be misleading. The best move for buyers and sellers alike? Carefully consider your own unique situation, do your homework and seek out advice from trusted sources to help ensure you are protecting your long-term financial success with any of the moves you plan to make.
Interested in learning more about the home buying process? Check out these AOL Real Estate videos:
What Real Estate Agents Can't Tell You
Common Home Buying Mistakes
Fixer-Uppers for First-Timers?
What It Costs to Own a Home
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