- The residential housing market will dip again in mid-2010 before settling into a recovery in the back half of the year.
- Foreclosure inventory will be a lot higher than some predict.
- No more historic lows on the 30-year fixed.
- Commercial real estate will continue to suffer the ills of low vacancy rates, low rents and high default rates.
Friday, December 04, 2009
2010 housing predictions
CNBC real estate reporter Diana Olick makes four predictions for the coming year:
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Really torn about one Ms. Olick. Her propensity to reverse spin every green shoot makes me think she is in the permabear camp (and thus untrustworthy). Still, this forecast for 2010 is awfully reasonable.
ReplyDeleteShe will be one to watch as real estate slowly improves.
Low vacancy rates for CRE??? That ought to be "high vacancy rates".
ReplyDelete#3's "no more historic lows on the 30-year fixed" directly contradicts #1's "settling into a recovery in the back half of the year"
ReplyDeleteAs soon as rates go back up and tax credits stop, housing is going to majorly tank. The only thing making sales slightly better than the worst crash in housing history is near free interest and no down payment.
2010 is going to be an interesting year for the bears.
ReplyDeleteFor years as prices were falling, they decried the bull arguments, Not in NOVA
Not in Arlington
Not in N. Arlington
Not in 22207
Not on my street
Not my house
Now, as prices rise, what will the bear arguments be? Bulls will say prices are rising, will bears now say:
Not in NOVA
Not in Arlington
Not in N. Arlington
Not in 22207
Not on my street
Not my house
Will they go the way of hippocrites, or just accept reality quietly??? We shall see...
Anonymous said...
ReplyDeleteReally torn about one Ms. Olick. Her propensity to reverse spin every green shoot makes me think she is in the permabear camp (and thus untrustworthy).
In my experience, when a permabear starts to sound reasonable (not mindlessly, emotionally bearish) it's a bullish signal.
The same could be said for permabulls. When one drops the profuse cheerleading ("this time is different!") it's a bearish signal.
Where is David? He doesn't post anymore? Why?
ReplyDeleteWhere is David? He doesn't post anymore? Why?
ReplyDeleteWhy should he? He accurately predicted the downturn in 2005, and once again predicted the upturn in 2009. With a batting average of 1,000, why stick around and risk the chance of being wrong.
(like James when he said DC would bottom AFTER the rest of the US).
David bought his home, and is off living his life. Something I hope to do in the near future as well.
I think Olick forgot to factor in the great big world around her when she wrote her ill-researched, mentally inbred, self-absorbed, culturally sheltered piece...
ReplyDeleteFrom http://www.informationliberation.com/?id=28182
"If things don’t change, this is the bottom line . . .
Under the WTO, the states must become compliant with the United Nations mandates, in order for them to continue receiving welfare funding from Washington for the people. Under this agreement the States must also support and make preparations to adopt the following:
1) The Codex Alimentarious (UN takeover of the food code and classifying vitamins as toxins, while making outlawed toxins– legal)
2) Universal Health Care (UN takeover of health care, population control, firearms control)
3) Agenda 21 (UN takeover of America’s agricultural output, farmland and water rights, relocation of people)
4) World Trade Organization (UN takeover of all manufacturing and trade)
5) Sovereign Prosperity and Partnership agreement (open borders with Canada and Mexico, the forming of the North American Union and creating a gold or silver backed universal currency)
6) Cap and Trade, and the Copenhagen Climate Agenda (UN takeover of all taxation, transportation, energy etc.)
7) Coordination of International Regulation (The UN takeover of the Federal Reserve System, the Securities and Exchange Commission, all issuing of currency, all government loans, collateral and the economy).
The list goes on and on . . .
Let the truth be known to all, until the American people realize that the United Nations is the oppressor, despotism will always be on our doorstep."
Anonymous:
ReplyDelete"Now, as prices rise, what will the bear arguments be? Will they go the way of hippocrites, or just accept reality quietly??? We shall see..."
I think that is a pretty bold statement. There's more going on here than just price. Ridiculously low interest rates, shadow inventory, and first time homebuyers' tax credit have propped up a bubble market. If that tax credit ends and you see continued non-declining prices in the DC area, I'll probably be buying a house rather than claim the market will still crash.
What I find funny are the permabulls that look at the recent increases and claiming immediate victory despite the tax credit's obvious impace. Anybody looking at select markets in the lower end before and during the credit's terrible existence could easily see the impact it had. Take away that and impose stricter FHA standards, and you're going to see this market tank again. Mark my words.
JackRussell said...
ReplyDeleteLow vacancy rates for CRE??? That ought to be "high vacancy rates".
Good catch.
(like James when he said DC would bottom AFTER the rest of the US).
ReplyDeleteHas the US bottomed or are artificial conditions creating a false bottom?
Has the US bottomed or are artificial conditions creating a false bottom?
ReplyDeleteWho knows - either one is possible. However what is now clear is given that DC bounced before the rest of the country, have less inventory and MOI than the rest of the country, have the strongest economy in the country, DC will NOT bottom after the rest of the US.
"Kevin said...
ReplyDeleteIf that tax credit ends and you see continued non-declining prices in the DC area, I'll probably be buying a house rather than claim the market will still crash."
See that statement right there means you are not a "perma"bear. You acknowledge there are situations where in the near term if XYZ happens and houses dont go down, you will buy.
The permabears will simply flit from sign of doom to sign of doom, never acknowledging that things are ever getting better (either next year or next decade). They will die without ever owning a house.
In any given business cycle, the permabulls dominate getting about 80% of the time where conditions favor their absurdly bullish outlook (i.e. the general state of affairs is things go up). However, about 20% of the time the indicators are in their favor. Its their time in the sun.
But what happens when their time is over? What happens to them when the inevitable signs of recovery appear? The rest of us who are situationally bearish or bullish will go on and live our lives, but the permabears will not.
Do they go quietly back into their caves of doom, or do they stay here in perpetuity waiting for their pet sign of when it is safe to buy without any regard of the changing conditions around them? Either way, its not going to be a pretty sight, but I am gonna pop some popcorn and watch the show!
Sorry that should be:
ReplyDelete"However, about 20% of the time the indicators are in the permabears favor. Its their time in the sun."
BTW - want to know who the permabears are? Just watch and see who responds to my post. They cant stand it when you call them out!
The bottom line is the entire real estate market could go completely one way or another. While you have to respect Olick's knowledge and experience, we will never know how the market is going to unfold until it does.
ReplyDelete"Do they go quietly back into their caves of doom, or do they stay here in perpetuity waiting for their pet sign of when it is safe to buy without any regard of the changing conditions around them? Either way, its not going to be a pretty sight, but I am gonna pop some popcorn and watch the show!"
ReplyDeleteYeah you better, cause the "permabears" have been right for about 6 years now and still counting. Japan has permabears too, and the guys eating popcorn are getting pretty damn fat.
So what should give the "permabears" so much optimism? The artificially low interest rates set by free markets...excuse me...the Fed Reserve? How about those investors...excuse me...the government buying those mortgage-backed securities? What will happen when the artificial stimulus is removed from the market? Who will be rushing to buy mortgage-backed securities after getting burned by the same financial instruments? Keep blowing hot air because when real market forces resume, whenever that occurs, you will be heading to the caves!
ReplyDeleteHa! I knew it. Just dragged 2 permabears out spewing angry comments. Shooting fish in a barrel...
ReplyDeleteUnfortunately you have no rebuttal. It illustrates your lack of understanding of the issues and reveals your low intellectual capacity.
ReplyDeleteThe next person who posts after my post is a fat head ninny! (watch someone post after this, its like shooting fish in a barrel)
ReplyDeleteHuh? What? Doh!
ReplyDelete