The new construction shortage will peak in the fall of 2010. The construction of new homes dropped drastically in 2009 -- just under 400,000 units, well below the 1 million needed to accommodate population increases and household formations. We will see an increase in prices as well as resale home appreciation.
2) INTEREST RATES WILL RISE IN 2010
Interest rates are expected to increase in 2010. Why? The government has reduced their purchase of mortgage-backed securities and we have too much debt. With the continued economic improvement, it's anticipated that rates will rise to between 6 and 7 percent.
3) AFFORDABILITY INDEX WILL CONTINUE TO SOAR
In many markets across the United States, the NAR Affordability Index (which measures the ability of individuals to buy homes) soared to an all-time high of 167.7, the highest since its inception in 1970. Buyers are beginning to pour into those markets. The markets affected most were the foreclosure-rich markets (California, Las Vegas, Phoenix and Miami). Cities with relatively high-priced housing costs such as San Francisco and Seattle were also positively affected by the affordability index. This trend will continue in 2010 provided interest rates stay low.
4) PRICES WILL START TO APPRECIATE
2010 will most certainly be a year of not just recovery but appreciation. The Case-Shiller index predicts price appreciation as high as 30% in some areas of the country by the end of 2010. This price rebound will allow many homeowners who currently lack equity in their properties to sell their home.
5) BABY BOOMERS RETURN TO THE SECOND HOME MARKET
Baby Boomers (born between 1946 and 1964, now aged 46 to 64) love real estate and they comprise a large segment of second home owners. Boomers damaged by the stock market crash are now beginning to recover financially. They are eager to buy... and they will. Expect to see a "boom" in the second home market in 2010. 
6) DAYS-ON-MARKET NUMBERS WILL DECLINE SHARPLY
A number of factors will lead to decreased market time in 2010: a lack of new construction inventory, low interest rates, the return of consumer confidence, and tax credits. Expect to see the return of multiple offers in 2010. By May, we should be under a 4-month average inventory supply.
7) A STABILIZED JOB MARKET IS ON THE HORIZON
