Housing In '09: Much Like '08

It's been a tumultuous year in the U.S. housing market, to say the least, with foreclosures reaching record highs, and interest rates at record lows.

At the moment, a full 45 percent of existing homes being sold had been foreclosed on.

Will 2009 bring relief for a beleaguered housing market?

On The Early Show Saturday Edition, financial contributor Vera Gibbons said, don't count on it.
"The market is widely expected to bottom sometime in late 2009," she told co-anchor Erica Hill, "but the recovery is going to be slow, going to be gradual, given the rising unemployment that we're seeing.
"Right now, we have a lot of homes on the market. We've got over an 11-month supply. A normal market would have closer to six months. You've got to wipe out some of that inventory before we see any kind of stability."
Some economists are saying things could stabilize in 2009 but, "I say, brace yourself for rough year, and expect some light at the end of the tunnel by 2010."

There are more than 4 million mortgages that may be prone to foreclosures, according to the Federal Deposit Insurance Corporation. Those are mortgages that are due to reset to higher payments over the next couple of years. Even with optimal governmental and lender intervention, Gibbons says, we should expect another 3 million foreclosures nationwide as unemployment rises. These days, not just about risky loans; it's also about mounting layoffs."

And the price outlook isn't any better, either.

Nationwide, home prices have fallen over 20 percent from their 2006 peaks, Gibbons points out, and the skid isn't over. Some analysts are projecting an additional 10-to-15 percent decline, and others, including one who accurately predicted the housing slide, expects another 20 percent decline in 2009.

All this despite rates on 30-year mortgages being at 45-year lows, with some qualified buyers locking in rates of 4.5 percent.

If you're a first-time buyer, have excellent credit, and can make sizable down payment, you're really in the driver's seat.

In addition, the low rates mean now may be a good time to refinance.

There's been a flurry of activity in the refinance market in recent weeks. If you qualify (you don't owe more on the mortgage than the home is worth, you have some equity in the home -- at least 10 percent), and you plan to stay in the house awhile, this would be a great time to refinance.

But sellers should wait if at all possible, Gibbons advises. The market has yet to stabilize and with we're still not at the point where you will be getting your money's worth. If you're able to pay your mortgage on time- stay put!

If you must sell your home, you've got to price it to sell, maybe even a little bit below market, five percent below market. Homes that are priced appropriately sell faster and at a better price than those that are priced too high.