Top 10 Real Estate Predictions for 2009

Banks Will Pursue Foreclosure Options Over Loan Modifications

Faced with the option to work with home owners by modifying existing loans or file foreclosure, banks will choose foreclosure.

© Big Stock Photo

As a result, the number of foreclosures will continue to rise. Many 5/1 ARMs will begin to adjust during 2009 and 2010, causing more foreclosures. But consumers won't see many of those foreclosed homes show up in MLS, which will artificially reduce inventory.

Some banks will change their guidelines to allow foreclosed upon sellers to buy another home after six months.

• Little or No Appreciation as Market Bottoms
• Housing Inventory Will Fall
• Bank Will Rent Out REOs
• Buyers Will Compete in Multiple-Offer Situations
• Real Estate Competition Will Shrink
• Sellers Will Shun Loan Modification Programs in Favor of Short Sales
• Banks Will Pursue Foreclosure Options Over Loan Modifications
• Mortgage Interest Rates Will Spike
• Rental Rates Will Increase as Demand Increases
• Tax Breaks for Home Selling Will be Revised