Any Real Estate Surprises for 2011?

There was an article I finally got to read from the Orange County Register last month about surprises that we might have in store for us in the real estate market in 2011, and if there will be any real estate surprises for 2011. The article covers Orange County as a whole, but I thought it would be interesting to break it down to my opinions for Costa Mesa real estate.

Improved Economy – I don’t think this will be news to anyone, the economy has been slowly getting back on it’s feet. What we need locally is an improvement in jobs- we are still in the 10-12% unemployment range. More jobs should produce a more stable economy, one where people will be more likely to step in and buy Costa Mesa real estate.

A Rush To Buy? – I don’t think we are going to be overwhelmed anytime soon, but early indications in January and the first week in February have activity going at a substantial clip, especially in Costa Mesa real estate. I think we will see robust activity through the end of summer, then we will see a bit of a slowdown should interest rates rise as predicted.

Rising Interest Rates? It has been widely predicted that interest rates will rise for those thinking of purchasing in Costa Mesa. The fed can’t hold out forever, and most signs point to rates rising by the end of the year. Rates are currently about 4.75% as of this writing for a 30 year fixed rate mortgage. If you are wondering the difference in buying with rates in the 4% range rather than say 6%, please see a previous post about the power of interest rates when buying a home.

Are you Stressed, or Distressed? This will be the year when the majority of the ARMs and adjustable mortgage products reset into new payments, with the last group set to reset in 2012. Those were the products that were interest only and allowed people to put no money down, among other things. There will certainly be a lot more short sales as a result of these toxic mortgages resetting. Expect Costa Mesa short sales to get a bit easier to get through the lenders – they seem to be closer to having their act together on that dealing with short sales.

What’s your take? Do you see Any Real Estate Surprises for 2011?