Predictions ‘10: What Will the Next Year Look Like?

by Tim Brown


It looks like the residential real estate market in 2010 will either be really good or really bad – depending on whom you ask, of course.

On the national level, many of the factors that played a role over the previous year will continue to affect the level of activity we see in 2010. The homebuyer tax credit will continue to prop up the lower end of the market where first-timers are buying, and it will also probably lead to an increase in sales on the higher end, as current homeowners trade up for larger, more expensive digs.

Historically low interest rates that have made monthly payments lower (and homes more affordable) may be a thing of the past. Unless the feds continue to take steps to juice the credit markets (with inflation looming, they may or may not), interests rates will continue to creep back up, and settle in at a more sustainable number, likely in the 6 percent range.

According to Fannie Mae CEO Michael Williams, foreclosures are still on the rise, and that trend will worsen in 2010. He warns of a backlog of inventory – not just the so-called “shadow inventory” that banks are holding from the market, but also from the millions of US homeowners that have simply stopped making their mortgage payments and have been unsuccessful at refinancing. Because so many homeowners are in a negative equity position, and as banks become more flexible and willing to work with underwater homeowners, 2010 may become the “Year of the Short Sale.”

Lawrence Yun, chief economist of the National Association of Realtors (and often the source of consumer eye-rolling), has a much more optimistic outlook to the housing market. At a December press conference, he predicted sales activity to continue to rise by as much as 15 percent in 2010, national inventory to shrink to a 6 to 7 month supply, and even a modest 3 to 5 percent appreciation on home values by the end of the year.

The Washington area will likely be affected by trends of its own. Although financial markets are working their way through a lot of the lending issues that became prevalent in recent years, Coldwell Banker’s Nate Guggenheim believes that 2010 will still be a great year for well-qualified buyers. He noted that “buyers are out there and the inventory is not,” and therefore well-priced properties will continue to receive multiple offers.

Gerard DiRuggiero of UrbanLand Company, a real estate brokerage firm for new developments in DC, tells UrbanTurf that several of his developer clients are expressing interest in small, 4 to 6 unit projects. He said that they recently sold two land parcels to condo developers, and have seen quite a bit of interest in two other parcels they have available. DiRuggiero believes the DC condo market saw its bottom in the spring of 2009, but because the commercial lending environment is still tight, particularly for large products, he thinks the area “probably won’t see any large developments being planned in the near future.” But he predicts that an already tightening inventory will continue to shrink, due to the favorable interest rates and the federal tax credits that created the same demand seen in the second half of 2009.

Conflicting trends and the lack of a crystal ball make predicting real estate very difficult, but UrbanTurf is interested in hearing your opinions and predictions about this coming year’s market. Please post your thoughts in the comments section.

See other articles related to: dclofts, dc area market trends

This article originally published at http://dc.urbanturf.com/articles/blog/predictions_10_what_will_the_next_year_look_like/1642


  1. Simon Landau said at 5:21 pm on Wednesday January 6, 2010:

    2010 is gonna be very interesting.  I believe we will see a huge rebound in the housing market, particularly in the first quarter with buyers interested in capitalizing on the homebuyer tax credit extension.  I also suspect that we will begin to see more movement on lots of units in DC neighborhoods in transition(ie: Southeast Waterfront, Mount Vernon Square, etc.)  Can’t wait to see things begin to unfold.

  1. Chris said at 8:47 pm on Saturday January 9, 2010:

    Simon while I’d like to agree with you, the signs for a huge rebound aren’t really there.  unemployment is still very high, the participation rate, or the share of the population in the labor force, fell to 64.6 percent in December, the lowest level since 1985, from 64.9 percent. *Source: Bloomberg.

    Also, the tax credit doesn’t last the full year…. http://www.irs.gov/newsroom/article/0,,id=204671,00.html

    The Worker, Homeownership and Business Assistance Act of 2009, signed into law on Nov. 6, 2009, extends and expands the first-time homebuyer credit allowed by previous Acts.

    Under the new law, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return. 

    The new law also:
    Authorizes the credit for long-time homeowners buying a - -
    —replacement principal residence.
    —Raises the income limitations for homeowners claiming the credit.


    I am hopeful, and would love to see a huge rebound.

Join the discussion

UrbanTurf now requires registration in order to post comments. Register here, or login below if you are already registered.

Click here if you forgot your password.

DC Real Estate Guides

Short guides to navigating the DC-area real estate market

We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Visit guides.urbanturf.com or start browsing below!

Northern Virginia

Profiles of 14 neighborhoods across Northern Virginia

Looking to Give People A Reason to Stay Past 6pm
Happily Straddling the Line Between City and Suburb
Columbia Pike
Arlington’s Neglected Stepchild is Getting a Makeover
Crystal City
Turning Lemons into Lemonade
Lyon Village
Developing An Air of Exclusivity?
Hitting Its Growth Spurt
An Urban Village Hitting Its Stride
Del Ray
Virginia’s Small Town Near the Big City
Eisenhower Avenue
The Vibrancy Might Take a Few Years
The Quiet Neighborhood By the Beltway
Old Town
Mayberry By The Potomac
132 Commerical-Free Acres
Downtown Falls Church
Staying the Same in the Midst of Change
Tysons Corner
Radical Change Could Be On The Way

See more Northern Virginia »


Profiles of 14 neighborhoods in suburban Maryland

Small-Town Living in the State Capital
Bedroom Community Gets Buzzing Cache
Cabin John
In With The New While Maintaining the Old
Chevy Chase
Affluence, Green Lawns and Pricey Homes
Downtown Silver Spring
Experiencing a Resurgence After a Bumpy History
A Suburb on Steroids
Rockville Town Square
Despite the Dynamism, Still Somewhat Generic
Takoma Park
More Than a Little Bit Quirky
A Foodie Magnet on the Verge of Change
Capitol Heights
Kudzu, Front Porches and Crime
Glass Half Full or Half Empty?
Mount Rainier
Artists, Affordable Homes and A Silo Full of Corn
National Harbor
A Development Rises Next to the Potomac
Riverdale Park
A Town Looking For Its Identity

See more Maryland »

Northwest DC

30+ neighborhood profiles for the city's biggest quadrant

16th Street Heights
DC's Sleeper Neighborhood
Where (Almost) Everyone Knows Your Name
AU Park
One of DC’s Last Frontiers Before the Suburbs
DC’s Northern Neighborhood on the Cusp
DC’s 535 House Neighborhood
Cathedral Heights
Do You Know Where That Is?
Chevy Chase DC
Not to Be Confused With the Other Chevy Chase
Cleveland Park
Coming Back After A Rough Year
Columbia Heights
DC’s Most Diverse Neighborhood, But For How Long?
An Island of Serenity East of the Park
Dupont Circle
The Best of DC (For a Price)
Foggy Bottom & West End
Where the Institutional Meets the International
Forest Hills
Ambassadors and Adventurous Architecture
Fort Totten
Five Years Could Make a Big Difference
Foxhall Village
350 Homes Just West of Georgetown
Friendship Heights
A Shopping Mecca With a Few Places to Live
History, Hoyas and H&M
Glover Park
One of DC’s Preppier and More Family-Friendly Neighborhoods
A Posh View From Embassy Row
LeDroit Park
A Quiet Enclave in the Middle of the City
Logan Circle
Trendy Now, But Not By Accident
Mount Pleasant
Sought-After Homes Surround Main Street in Transition
Mount Vernon Triangle
From Seedy to Sought-After
The Long, Skinny Neighborhood at the City’s Northwest Edge
Park View
It’s Not Petworth
Penn Quarter/Chinatown
DC’s Go-Go-Go Neighborhood
Getting a Vibrancy of Its Own
The Duke’s Former Stomping Ground
Shepherd Park
DC’s Garden of Diversity
Spring Valley
A Suburb With a DC Zip Code
Not To Be Confused With Takoma Park
Not Quite Like Its Neighbors
U Street Corridor
The Difference a Decade Makes
Woodley Park
Deceptively Residential
Adams Morgan
No Longer DC’s Hippest Neighborhood, But Still Loved by Residents

See more Northwest DC »

Southwest DC

The little quadrant that could

Southwest Waterfront
A Neighborhood Where A Change Is Gonna Come

See more Southwest DC »

Northeast DC

Profiles of 10 neighborhoods in NE

New Development Could Shake Up Pastoral Peace
A Little Bit of Country Just Inside the District’s Borders
Not to Be Confused With Bloomingdale
H Street
A Place To Party, and To Settle Down
The Northeast Neighborhood That Few Know About
Michigan Park
A Newsletter-On-Your-Doorstep Community
Evolving from a Brand to a Neighborhood
Ripe for Investment Right About Now
The Difference 5 Years Makes
Big Houses, A Dusty Commercial Strip and Potential

See more Northeast DC »

Southeast DC

6 neighborhoods from Capitol Hill to East of the River

Capitol Riverfront
Still Growing
Hill East
Capitol Hill’s Lesser Known Neighbor
Congress Heights
Gradually Rising
Notable for Its Neighborliness
Historic Anacostia
Future Promise Breeds Cautious Optimism
Eastern Market
A More European Way of Living

See more Southeast DC »

Upcoming Seminars ▾