There’s a lot of uncertainty surrounding the housing market. Is it going up? Down? A lot of people are making predictions, but they tend to look nationwide or citywide. But what about your specific farm area? Here is the best way to determine what YOUR housing market is going to do in 2010.

Many different factors are responsible for whether prices rise or fall in a specific market. Markets all react to their own unique conditions. Different neighborhoods and even different types of properties will react to the circumstances that affect them specifically.

You want to look at homes that are within a 1 mile radius from the center of your farm area. You also should look at the at homes that are within 10% of the median square footage of the homes you would like to buy and sell.

Generally, home price changes are determined by the months of inventory available. Price changes lag behind inventory by 6-10 months. As inventory decreases, you will see prices increase 6-10 months later. As inventory increases there will be a fall in prices 6-10 months later. Investors can use a Short Sale to get the price of a home back on the market at the lowest prices well before the rest of the MLS catches up.

As a general rule, prices will fall if there are 8 or more months of inventory available. They will rise if there are 2-3 months available. This is a solid rule to use for your market in 2010.

The First Time Homebuyer credit was not able to quench the demand for starter homes in many areas. If you are investing in one such market, the feeding frenzy for lower end homes may very well continue. Because the credit was extended and expanded to include all buyers, both sales and prices might increase because there is a larger inventory of homes available and many more buyers in the market. The impact of the tax credit should not be overstated, though. Of all people who bought homes last fall, only 6% said they did so because of the tax credit.

Members of Gen Y, those born between 1977 and 1994 are now in their prime home-buying years. A small increase in demand could spark new building in the areas of the country that were able to generate jobs and stay relatively stable during the recession.

The cost of ownership is another factor that directly drives up the price of homes. In 2010, the U.S. Treasury will play a very important role in determining whether the market will rise or fall. There was been little incentive shown by the Federal Reserve to raise interest rates in 2009, but it might be different in 2010. The Fed might experience pressure to raise interest rates in order to attract more buyers of U.S. debt. Even just a small increase in interest rates could drive potential buyers out of the market.

Higher property taxes or income taxes at the state and local level could drive potential buyers out of the market. Local and state governments might succumb to pressure to raise these rates in order to balance their budgets for 2011.

Lastly, foreclosure rates could play a very important role in your area. There will be spikes in foreclosure rates all around the country. Especially in those areas that relied heavily on Option ARM mortgages to sell homes between 2004 and 2007. Their payments will adjust up as interest rates necessarily increase. Communities already experiencing high unemployment will also be facing an increase in foreclosures.

These are just a few of the factors that will impact your local market conditions in 2010. Apply the ones that fit. Every market and micro-market will be different.

Looking to learn more about real estate investing? Then visit www.REWealthCoach.com to find the best advice on how to find motivated sellers.