Top 10 Must-Know Real Estate Trends for 2010

Signs of improvement make 2010 a promising year, for Smith Mountain Lake

#10: Cash Is King

If you plan on buying a home in 2010, especially a low-priced foreclosure or short sale, be prepared for competition. Demand is high for these properties, so it's not uncommon for bidding wars to break out over them. Real estate investors are particularly tough for regular buyers to contend with: Many investors are making all-cash offers, . The flip side is there are many full cash deals even at the higher market end, so be prepared either way.

#9: Smoother Sales

In 2009, sales overall generally had a new little glitch right before closing, with lenders. Sometimes it was a road maintenance agreement, sometimes it was a more expensive item for the buyer, a flood certificate. But overall the closings went well, everything worked out and we expect the banks to have more information now, since they all requested so much info about our lake. When using a Realtor, it is best to ask what can you expect this year going into closing. What kinds of glitches did they experience last year? Use a realtor that sells exclusively sells at Smith Mountain Lake, since there are many new regulations involving docks, lake issues, plats, deeds, short term rental laws/ regulations and more. Make sure your Realtor understand each of the issues and all of the issues, or you may have issues down the road.

#8: Tricky Appraisal Rules

Ridiculously inflated home prices in many markets contributed to the housing crisis, motivating the federal government to pass the Home Valuation Code of Conduct (HVCC) -- a set of rules that determines how appraisals should be made -- in May 2009. The law aims to distance appraisers from the real estate transaction so they can provide an unbiased, objective analysis of a property's market value.

But real estate agents argue that the system is flawed and deals are falling through because of the ever-changing, lengthy maze of rules. Long story short: With the new rules in place, appraisals now take longer, are more expensive and are often conducted by appraisers unfamiliar with the local market. The National Association of Realtors has called for a moratorium to address the shortcomings of the HVCC, but until these rules are ironed out, expect them to hinder deals in 2010. Several  Smith Mountain Lake appraisal companies offer valid appraisals. Feel free to call for their numbers or look them up on line. These companies are well established and have been servicing the lake for several years and are very familiar with the inventory, and the closings.

#7: A Conflicted Construction Market

According to McGraw-Hill Construction's Construction Outlook 2010 report, new construction is expected to climb 11 percent next year. However, in October 2009, housing starts unexpectedly plunged to the lowest level in six months, leaving many wondering if construction activity is really in recovery. The low number of housing starts in October suggests that many builders cut back on new projects while waiting to hear if the first-time homebuyer tax credit would be extended. With the credit extended, we may see housing starts climb again in 2010, but because lenders are still reluctant to finance new construction projects for builders and new condo purchases.for homebuyers, inventory will continue to be a problem. Construction here at the lake, has slowed, which is fine, since we still have many new homes to choose from. The flip side of this is - you can obtain some great contractors, with some great pricing for your new home.

#6: Rising Mortgage Rates

In 2009, the Federal Reserve bought up a massive amount of mortgage-backed securities, keeping mortgage rates at historic lows for much of the year. However, the Fed is scheduled to end those efforts in March 2010, meaning mortgage rates could jump as much as a full percentage point next year. If you're considering buying a home, now would be the time to take advantage of historically low interest rates. If you are even considering buying that vacation home here on the lake, then best to get moving. As I write this, we have had 24 closings in 8 weeks, and 10 to go this week, if all succeed. So the buyers are really snatching up the great inventory before the market goes back up as well as the rates.

#5: Lending Standards Still Tight

According to the Federal Reserve, fewer banks tightened their lending standards in the third quarter of 2009. However, that doesn't mean lending standards have gotten looser, either. In 2010, banks will continue to keep the sub-prime mortgage debacle in mind and require extensive documentation and stellar credit from borrowers.  As a buyer, come to the lake with a pre-approval letter in hand, ready to act. It may take a few trips to see obtain your dream place, but things are sailing along at Smith Mountain Lake, and your competition is the aggressive buyer who has been here already for the past year and anchoring down in 2010.

#4: Stabilizing Home Values -- in Some Places

According to the Standard & Poors/Case-Shiller Home Price Index released in November 2009, U.S. home prices have improved for two quarters in a row. The national index rose 3.1 percent from the second quarter to the third quarter of 2009. Likewise, the National Association of Realtors recently reported that median home prices have risen for two consecutive quarters. NAR's chief economist, Lawrence Yun, also predicted that home prices will grow 4 percent next year. Reports like these paint an improving national picture, but locally, many markets still have a ways to go before home values recover. According to the Case-Shiller Index, Minneapolis and San Francisco showed the greatest increases in values, while values in Cleveland, Las Vegas and Tampa continued to decline. The Case-Shiller report did not analyze Smith Mountain Lake real estate, but they if the last 2 months are any indication then our lakefront inventory will be narrowed down by the end of the year, if we continue at this rate.

#3: More Lower Prices to Come

Home values may be stabilizing in some markets, but challenges still lie ahead. Due to low closing prices last year, homes will still close low in price,

Smith Mountain Lake foreclosures, have occurred at a slow rate, if hardly any. We will see more with people that bought more than they could handle, probably on the Franklin County side. The Bedford County side however has had a huge impact with the investors - closing on the great low priced deals on the lake and marketing them as a vacation rental. The lower pricing will occur as sellers who really need to sell just suddenly drop their pricing, to move along. But you as a buyer have to be nearly standing here at the moment to obtain the deal.

#2: More Buyers Entering the Market

In 2009, the federal government's $8,000 tax credit for first-time home-buyers was a huge topic in the real estate world. The credit was met with mixed reactions: Some said it had little impact on the housing market, while others claimed the credit encouraged thousands of on-the-fence buyers to finally purchase their first homes. The National Association of Realtors, for example, estimates 350,000 homes nationwide were sold to first-time buyers who probably wouldn't have bought a home if not for the credit. The group also reports that about 47 percent of all home sales in 2009 will be to first-time home-buyers, up from 41 percent in 2008. This will also expedite the secodn home market as well.

Hoping to spur the housing market's recovery, the federal government extended the credit -- which was set to expire on Nov. 30 -- and gave buyers until April 30, 2010, to secure a purchase contract. The credit was also expanded to include some existing homeowners, plus buyers with higher incomes. If the original tax credit brought more first-time buyers into the market, the expanded credit should motivate current homeowners to trade up.

#1: Still a Buyer's Market

For home-buyers, 2010 will likely be another year of low prices and a large inventory of homes on the market. Conversely, for home sellers, 2010 will be another year of low sales prices and fierce competition from other sellers.

Fortunately, home sellers have many strategies at their disposal to stand out from the crowd. Today's home-buyers are looking for move-in ready homes, and many foreclosed homes are not in the best shape when they hit the market. Preparing your home for sale -- which can include cleaning, making repairs, making upgrades and staging -- can help your home stand out from the foreclosure down the street and get you a higher sales price. The sales price may be lower, but we can all expect the amount of volume sold will definitely be up at Smith Mountain Lake.