What’s in Store?
In keeping with my patented formula for predicting future housing prices — extrapolate current trends — herewith is my forecast for the second half of 2011:
–Continued, record-low mortgage and interest rates;
–Brisk demand for affordable, updated homes in high-demand Twin Cities neighborhoods (think, Linden Hills, Morningside, Fern Hill, Tyrol Hills, etc.);
–Anemic demand for upper bracket (> $1.5 million) properties, especially larger ones needing significant updating;
–Increased tightening in the Twin Cities rental market, where vacancy rates are only 3% and falling.
–More working off of lender-mediated inventory (short sales and foreclosures).
The big variables to watch?
What — if anything — succeeds QE II; any legislative progress to resolve Fannie Mae and Freddie Mac; and how the U.S. debt ceiling standoff plays out — specifically, whether the resolution involves paring back housing incentives/tax breaks such as the mortgage interest deduction.
