At the moment (late 2009), it seems that real estate values may have stopped falling finally. Are they headed back up now, or are we in for a period of stable prices that barely move for years? Or are they going to start dropping again? I suspect we are in a slow recovery, but let’s look at some of the things that determine prices. Watch these factors and you can make your own predictions.

Supply

The state of housing supply, like many other factors, is not the same in all parts of the country. Some areas have enough empty homes to meet demand for a long time to come. In other areas the building boom never came, and so the supply is more in line with demand.

In general there is an over-supply in the country still. Watch as that is eaten up and at some point prices may spike upwards, since it will take some time for builders to realize it is safe to build a few homes as speculations again. If you can’t find the statistics you need easily for your area, you can call the local board of realtors and ask how many homes are sold each month. Then divide that into the number of MLS listing to see if the supply is below six months yet (this is a more normal supply).

The foreclosure rate will also affect the supply going forward. We may still have an increasing rate of foreclosures due to loans that are due to adjust their interest rates. That will put more homes on the market, and because banks need to sell fast they will sell cheap, potentially lowering the prices of all real estate. When foreclosures start declining prices may rebound.

Demand

One of the things that has affected demand for real estate is the first time home buyers tax credit. It has been an $8,000 motivation to buy, but it will likely have expired by the time you read this. That means we might see less demand going forward.

Interest rates have also been near historic lows, which always helps demand. If they rise much there will be millions of potential buyers who will qualify for tens of thousands of dollars less on a mortgage loan. That might push demand down, especially for homes that are above average in price.

Immigration, both legal and otherwise, creates demand for housing. During the boom years even illegal immigrants were able to get home loans, and those that rented single family homes contributed to demand for those through the investment purchases of their landlords. Immigration has slowed, and due to the recession many illegal immigrants have even returned to their home countries. If you see immigration levels returning to normal that will be a good sign for real estate values.

Unemployment is still rising as I write this, and that dampens demand, as well as increasing supply due to foreclosures. When total employment in the country starts rising again that will be a good sign for home prices. Watch your local unemployment figures as well, since they may change before the rest of the nation (or afterwards, for that matter).

Inflation

In addition to raw supply and demand issues, there is the matter of inflation. Although it is not yet showing in prices of real estate or even most other goods, that will change. The government is creating money at a historic rate, and as soon as the recession is clearly over and employment starts to rise, we can expect that to push the prices of almost everything up.

Watch the things outlined here to predict real estate values going forward. In the mean time, consider the current slump to be a huge sale for homes and other properties.

There has been a great deal of negative press recently regarding sell to rent back schemes. Such schemes are offered to those homeowners who are struggling to meet their mortgage repayments or who have fallen behind on their repayments and for whom repossession is a huge threat.

It seems that various companies are less than ethical when it comes to making a reasonable offer. Some offer as little as 60% of the cost of the property. Some buyers sell the properties on to buy to let landlords, who may be unsuccessful to preserve mortgages which lead to banks repossessing in any case. Some considerably improve up the “affordable” rent agreement, which leaves tenants yet again with a struggle to wait in the property. Due to factors such as this and more, many homeowners do not have the deal they thought they were getting and have fallen victim to sell and rent back company traps. If you are considering selling your home and renting back here are various questions that you must ask the company before signing your home away, if you want to avoid falling into a trap and a decision you in a while regret.

One of the first questions that you should ask is how long you are able to rent back the property. Some companies lead homeowners to believe they can rent back indefinitely. However, in the majority of cases there is no actual lifetime guarantee. If the company you are considering selling your home to tell you that you are able to remain in the property for life, then ensure they provide you with this information in writing in a legally binding tenancy contract.

You may desire to find out if you have the alternative of being able to purchase back the property in the future if your condition allows and if so how the company works out the amount you have to pay. If the company refuses to present you the chance to buy back the property, then you may want to ask yourself why this is, as this may be a sign that they are not interested in you staying on in the property over the long term. If the company does present you the opportunity of buying back then you need to ask how they work out the figure you are given. It is likely that companies will give you with a set figure, which you are able to pay over time, at the time of you selling the property. Some ask that you pay a percentage of the right value and others may ask that you pay what they paid you for the property plus a set sum or premium on top of this. Whatever alternative you are given it is critical that you get the figure in writing.

When you take the option of being able to sell to rent back you want to ask how long the rent will be fixed and how the company will review it. Usually the rent will be fixed for the initial tenancy agreement. However, some companies may include break clauses in the agreement, which would allow them to increase the rent before this period had ended. Generally, you can expect a slight increase in rent every 1 or 2 years but make sure that you get everything in writing.

Read more about sell and rent back schemes or if you have any questions about rent back service.

1. No Clutter. Throw out old newspapers and magazines. Pack away most of your small items like figurines and other trinkets. Store clothing that won’t be used in the near future to make closets seem roomier. Clean out the garage. Buyers like to visualize their possessions in the house and that is hard to do when the ocean home is full of clutter.

2. Wash your windows and screens. Washing the windows will allow more light into the home and will allow buyers to see the beautiful view. Plus, dirty windows are a turn off.

3. Keep everything really clean. Wash fingerprints and dirt from light switch plates. Clean the floors, appliances, dust any furniture. A clean house makes a better first impression and tells buyers that the home has been well cared for.

4. Replace dim and blown light bulbs. Clean any dirty window treatments, i.e. draperies, blinds, etc. The goal is to make the rooms as bright as possible. Arrive early and turn lights on before buyers arrive to see the home.

5. Make all minor repairs that you can find. Everything you don’t repair now will be revealed in the home inspection and can create a bad impression. Small problems such as sticky doors, torn screens, cracked caulking, cracked receptacle covers or a dripping faucet may seem trivial, but they’ll give buyers the impression that the house isn’t well maintained. You can also go a step further and get a sellers home inspection to see for yourself what the home inspector will see. You can also market the home as being pre-inspected.

6. Maximize your curb appeal. Cut the grass, rake any leaves, trim the bushes, and edge the walks. Put a couple of bright potted flowers near the entryway to cheer things up and get the buyers attention.

7. Fill cracks and holes in the driveway. Apply a sealant if needed.

8. Clean out any debris in the gutters.

9. Polish or replace your front doorknob and door numbers.

10. Eliminate odors in the home. Clean carpeting and curtains to get rid of unpleasant odors in the home. If the carpet is old, consider replacing it. The added value to the home will likely far outweigh the cost of replacing it. Open the windows. The number one turn off to a potential buyer is an unpleasant odor.

Hubert Miles is the founder of Waterfront Houses USA, an internet listing service that provides Oceanfront Homes For Sale and Ocean Homes For Sale available in the US and Canada.