2011 HOUSING TRENDS

McMansions are out; compact housing is in: The era of the McMansion is over, according to the 2011 edition of "Emerging Trends in Real Estate," co-published by PricewaterhouseCoopers and the Urban Land Institute. Not only are baby boomers downsizing to more manageable homes, but 1st-time buyers are also entering the market with extremely different tastes than their parents. The younger generation of homebuyers, born between 1977 and 1994, are interested in smaller homes in vibrant, compact, walkable neighborhoods. As baby boomers move into smaller homes, who will they sell their large, suburban homes to?

Homebuyers are thinking long-term: In the past, many homeowners thought of their houses as "credit cards" to borrow money against -- a mindset that caused many of the financial problems. While most Americans still think buying a home is a smart financial move, they also realize that a house is more than an investment. Instead, today's buyers are looking for a home, a place to provide shelter and security for a family. As a result, homeowners are planning on stay in their dwellings longer; 1st -time homebuyers want to own their homes for a decade, while repeat buyers want to own theirs for 15 years.

More foreclosures to come: Foreclosure processing was delayed this fall by the "robo-signing scandal" raising concerns that many homeowners may have been unfairly evicted. Though the controversy caused a dip in foreclosures in October, it won't cause a huge drop-off in the number of distressed properties entering the market, says Rick Sharga, senior vice president of RealtyTrac. At the rate the banks are going, it will likely take several more years to work through the millions of delinquent mortgages. But on the bright side, if banks continue to foreclose homes gradually, home prices are likely to stay stable.

Mortgage rates remain low: It's not too late to take advantage of low mortgage rates. While rates are expected to rise slightly in 2011, they will likely remain low, even under 5

Housing recovery contingent on jobs: Above all, a healthy workforce is key to housing recovery. While the unemployment rate remains high, current homeowners will continue to lose their homes to foreclosure, and potential homebuyers will find it difficult to qualify for loans. According to the National Association for Business Economics, unemployment will stay above 9 percent in 2011, which could hold back a housing recovery next year.

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