As we get ready to say goodbye to 2008, it's worth looking back at the year that was for home buyers, sellers and owners.
Frankly, I wouldn't be surprised if this year goes down as one of the worst ever for housing since the Great Depression.
Housing values fell by double-digits in many metropolitan areas. Housing starts virtually stopped. Inventories of new and existing homes grew dramatically. Mortgage interest rates remained relatively high, even as the short-term Federal Funds rate plunged to nearly zero by the end of December.
Foreclosures reached record numbers, and lenders found themselves buried under stacks of short sale proposals, foreclosure filings and loan modifications. Late in the year, Fannie Mae announced it would stop evicting renters from foreclosed-upon houses if they've paid their rent on time.
Of the loans that had been modified, more than 50 percent went delinquent, reflecting the increasing number of lost jobs and diminished paychecks.
The old lender's maxim holds true: If you don't have a job, you probably won't make your mortgage payment.
Sometime around the middle of the year, when Fannie Mae and Freddie Mac were taken over by the government, lenders realized that having a real job with a real income is central to assessing someone's ability to make monthly payments of principal, interest, taxes and insurance.
Lenders also rediscovered the beauty of having some skin in the game. Except for the USDA's rural loan program and a VA loan, zero down-payment mortgages have dried up.
Sellers aren't happy, but there are plenty of deals to be had, as the economy is expected to get worse at the beginning of 2009. Higher rates of unemployment mean more foreclosures, driving down the price of homes.
The silver lining for home buyers: If you're looking to buy a house, 2009 could be a great year to close on a deal. If you're planning to buy a house this coming year, here's my annual list of New Year's resolutions you should consider making:
As a buyer, I resolve to:
Get my credit and finances in shape Put a lid on spending, perform "plastic surgery" on credit cards and don't max out any one card (in fact, never charge more than 25 percent of your maximum credit limit) or your credit score will suffer.
