1. Little or No Appreciation as Market Bottoms

In parts of the country hardest hit by 2007 – 2008 foreclosures such as California, Michigan and Florida, prices will continue to soften. In scattered markets, the bottom will already have been reached by April but media won’t report it until late summer, after a trend has been established.

There will be no more dramatic price drops such as those 30% to 50% declines we saw between 2006 and 2008. But the market will not stabilize in 2009. Furthermore, consumer confidence will continue to fall, and more people will find themselves out of work.

On the bright side, employed home buyers with good credit will find 2009 is an excellent time to buy.

2. Housing Inventory Will Fall

Sellers will withhold listings from the market or cancel listings that don’t sell within 90 days. Although persistent demand will come from first-time home buyers and investors, inventory will fall. Falling inventory will not drive up the prices.

The number of homes for sale in states such as California will decrease by 45% or more from the same months in 2007. New home starts will fall by the wayside, and the construction industry will see at least another 10% in layoffs.

Although fewer homes will be available for sale, those sellers will be motivated to sell.

3. Bank Will Rent Out REOs

In an effort to drive up housing prices, banks will slowly release their REO inventory to the market and price those homes at 5% to 20% under comparable sales. Banks will be under great pressure to cut losses and increase revenue. Although state charters prohibit banks from renting out bank-owned homes, banks will find a way to work around this prohibition.

By transferring title from bank-owned homes into holding companies, banks may find a loophole that will allow them to rent out homes instead of putting them on the market. This maneuver will let banks receive income while waiting for the market to turnaround.

To rent the homes, banks will be forced to fix them up.

4. Buyers Will Compete in Multiple-Offer Situations

Due to limited inventory, coupled with pseudo pricing on short sales and foreclosures, more buyers will find themselves competing over the attractive listings. It will not be unusual for sellers to receive 20 or more offers on these listings.

Multiple offers may drive up the prices to market value but buyers will refuse to pay over market value. The stiff competition will cause frustration and confusion among buyers who will find themselves going head-to-head with investors. Cash buyers will win every time over buyers who need financing.

This means it will be more important than ever for home buyers to hire an excellent negotiator.

5. Rental Rates Will Increase as Demand Increases

Surging numbers of home owners will lose their homes in 2009, which will turn former home owners into tenants. Some home owners will walk away from their residences, deciding that home ownership is not worth the aggravation, and return to living in rentals.

Because new construction will be at a standstill, existing inventory will serve as shelter. There will be fewer rental homes available than the demand will dictate, which will put upward pressure on rental rates. Sellers who are unwilling to take a hit on their sales prices will put their homes on the market as rentals, but that won’t provide enough inventory to fulfill demand.

It’s a good time to be landlord.

Renting out makes good business for all house owners. Renting out can be a significant part of monthly income, which is usually a good help in many ways, besides taking care of house maintenance expenditure. However, there is another side of a coin to be taken into consideration. Renters tent to appear victims of their landlords. Since they are not property owners, their rights are oftenly violated.

Laws protecting tenants and landlords have become very complex by now. It is not an easy deal to learn and remember, or even undersand your rights. Anyway, there is one basic rule to follow not to appear back at the bottom of the ladder. Careful reading and estimation of your rent agreement will prevent you from supplementing a list of horror renting stories with your own. Understanding your state law and the terms of your lease are your best guarantees against future problems.

You don’t have to be expert in landlord-tenant law to protect yourself. Just brush up on your rights and read your lease before signing the dotted line. Here the 15 basic renter’s rights to know to protect yourself from land-lord’s dishonesty:

1. The Fair Housing Act makes it illegal to deny housing to a tenant on the grounds of race, color, sex, religion, disability, family status, or national origin.

2. Residential rental units should be habitable and in compliance with housing and health codes—meaning they should be structurally safe, sanitary, weatherproofed, and include adequate water, electricity, and heat.

3. Many states limit the amount landlords can charge for security deposits. (See this page on Nolo.com to find out if yours is one of them.)

4. A landlord should make necessary repairs and perform maintenance tasks in a timely fashion, or include a provision in the lease stating that tenants can order repairs and deduct the cost from rent.

5. A landlord must give prior notice (typically 24 hours) before entering your premises and can normally only do so to make repairs or in case of an emergency.

6. Illegal provisions in a rental agreement (provisions counter to state law) are usually not enforceable in court.

7. If a landlord has violated important terms related to health, safety, or necessary repairs, you might have a legal right to break your lease.

8. If you have to break a long-term lease, in most states landlords are required to search for a new tenant as soon as possible rather than charging the tenant for the full duration of the lease.

9. Damage or security deposits are not deductible for “normal wear and tear.” Some states require that a landlord give an itemized report of any deductions.

10. Most states require landlords to return refundable portions of a security deposit within 14 to 30 days after the tenant has vacated the premises, even in the case of eviction.

11. Landlords usually can’t legally seize a tenant’s property for nonpayment of rent or any other reason, except in the case of abandonment as defined by law.

12. Landlords are legally prohibited from evicting tenants as retaliation for action a tenant takes related to a perceived landlord violation.

13. A landlord cannot legally change the locks, shut off (or cause to have shut off) your utilities, or evict you without notice; eviction requires a court order.

14. If a landlord makes life so miserable for you that it forces you to move, it may be considered “constructive eviction,” which is usually grounds for legal action.

15. In many states, it’s illegal for a lease to stipulate that the tenant is responsible for the landlord’s attorney fees in case of a court dispute.

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