Media Alert: December 17, 2010 UMD Finance Expert on the Housing Industry Outlook for 2011

Media Alert: December 17, 2010
For housing market reporters, editors, producers
Contact: Carrie Handwerker; 301-405-5833

UMD Finance Expert on the Housing Industry Outlook for 2011

Will the housing marketing market finally rebound in 2011? Clifford Rossi, a teaching fellow and executive-in-residence at the Center for Financial Policy at the University of Maryland’s Robert H. Smith School of Business. shares his outlook for the coming year. He says things are looking up. Rossi has more than 25 years in the banking and regulatory industries, most recently at Citi Group where he headed risk for their domestic and global mortgage portfolio.

Rossi’s outlook for the housing market for 2011:

“Much will depend on the economy next year – how strong it is or not, particularly with the stimulus either through quantitative easing or suggested tax policy changes. I would say the housing marketing in general will still be stagnant.”

• Not much more price deterioration, but still sluggish
• High housing inventories, but some reductions from today’s levels
• We’ve turned a corner on the mortgage delinquencies
• Foreclosure: slight decline, but still high

Four policy actions to watch for in 2011:

• Loan modifications: Government actions to prod lenders and Fannie Mae and Freddie Mac to force them to perform more principal reductions on mortgages to reduce the foreclosure rate
• New rules from the Dodd-Frank Act that will redefine the types of financial products that will be securitized. This could raise borrowing costs in the short-term and or reduce/restrict credit availability for mortgages.
• Foreclosure servicing activity, particular at the state level
• Keep an eye out for Obama Administration reforms for Fannie Mae and Freddie Mac – but don’t hold your breath

Buying or selling a home?

Selling:

• Look at how many houses on the market in your area, how many are in foreclosure, and whether they are sitting on the market (for more than 4 months)
• If you don’t have to, don’t sell in 2011 – prices will still be lower

Buying:

• Good timing – high inventory, low interest rates (but starting to rise)
• Don’t hold out for more home-buyer tax credits
• Take a long-term view -- plan to be in the house at least 3-5 years

Contact:
Clifford Rossi, executive-in-residence with the Center for Financial Policy; 301-908-2536.