John Burns Real Estate Consulting works mainly with homebuilders just so you know his natural bias.

  • Investors: Investors and, yes, even flippers will continue to grow in numbers as they realize housing is the best risk-adjusted return on their money.
  • Boomerang buyers: Foreclosed homeowners, who are currently renting homes, will come back in droves. In Phoenix, they are paying $1,300 in rent for a home whose mortgage payment would be $1,000. That situation is not sustainable. The Federal Housing Administration and Department of Veterans Affairs have low down payment programs with insurance premiums that push rates near 5.0%. Those payments are still very affordable.
  • Entry-level buyers: First-time homeowners, who have been sitting on the sidelines waiting for a sign of the bottom, will hear about price increases in their desired neighborhood and rush to become homeowners.
  • Move-down buyers: Empty nesters and retirees, who have plenty of equity in their existing home, will buy a home that is more suitable to their current lifestyle, which may or may not include adult children as well as their aging parents.
  • Moveup buyers: The price appreciation that occurred in the last year has already lifted 1 million underwater homeowners above water with future price appreciation to lift them even more.
Advertisements