Although the housing market looked like it was on the road to stabilization in the early part of 2010, the second half of the year dashed those hopes. Ultimately housing prices ended the year down 4.1%, according to the industry consulting firm of Clear Capital. What happened?
The rise in prices toward the end of the first quarter of 2009 was due to the home buyer credit's effect which began to be felt, having been passed by Congress as part of the big stimulus package. Prices began steadily rising into late 2009, when the credit was renewed. The final expiration in May 2010 prompted another rush in the second quarter to buy a home, increasing prices further. With the end of the program, prices fell deeply in the second half of 2010.
What is the outlook for 2011? As 2010 proved to be a volatile year due to the credit's influence. By contrast 2011 is predicted to have fewer ups and downs, as prices slowly recede throughout the year. Markets with high unemployment and foreclosures will see greater problems with home prices.
The silver lining is that 2011 will be less volatile than 2010, with some markets stabilizing.