1) High foreclosure rate. Foreclosure rate continues to rise nationally. Lots of financial pain will ensue as hundreds of thousands of homeowners lose their housing units to foreclosure in 2007. The high 2007 foreclosure rate will be due to the very loose lending standards of the past few years in conjugation with the declining housing marking. The Center for Responsible Lending says that "About 20 percent of sub-prime mortgages granted in the past two years will end in foreclosure as owners struggle to make payments and home prices stagnate." The irresponsibility of the lenders is tragic.
2) Prices will continue to decline in most bubble markets. In general, housing units in the bubble markets will fall in nominal dollars between 1 - 12% and in real dollars between 4% - 15%. [ This is for individual housing units, which is not the same as the median sales price.]
3) Interest rates will edge up somewhat, but remain low. By year end, the average contract interest rate for 30-year fixed-rate mortgages will increase to about 6.5 from its current of about 6.1. The average contract interest rate for one-year ARMs will increase to 6.3 percent from its current of about 5.8.
4) Job losses will accelerate in the residential construction sector. The percentage of job losses will be even greater in the bubble markets. Nationally, between 400K to 600K construction jobs will likely be lost during 2007.
5) The US economy will slump into a recession. As the housing market continues to decline, consumer spending and business investment will fall. It will be tough.