Thanks for the post

Michelle Way ABR GRI WCR You're welcome! 

Jim:

I like this.  'Course, I like to speculate.

Mortgage rates will stay very reasonable for the foreseeable future.

Lenders will tighten as they continue to overreact to past problems.  Closing that used to take weeks will continue to take "forever" to fund.

Number of agents will go down although many brokerages will continue to advertise them just like they were full time professionals.  Offices will fold.  Offices will consolidate.  Offices will merge.  I can even see some restructuring of franchise fee's as broker profitability will become a major concern.

Spring markets may rise in inventory but I think many will refinance and improve. 

I don't think we level out until 1st or 2nd quarter 2009.

Many more foreclosures.

I think many sellers will need to bring cash to the table or their lenders will work with them to avoid the foreclosure.  Home prices drop.

I really don't know much about condo's because we don't do a lot of them here.

Commercial will soften slightly. 

Griffin Georgia Real Estate - Jessica Horton  Jessica thank you for your assessment!  I still see a lot of opportunity next year in the Atlanta market.  Some may miss the opportunity, because they will approach it with the eyes of 2006, and early 2007.

Hi, Jim: I tend to agree with most of your predictions...
1) Rates will hold steady, but I expect to see a slight increase.
2) Credit will definitely tighten; I think the credit market will get much worse before it gets better.
3) We will probably see a 10-15% drop in agents.
4) Inventory levels will swell in March/April. Absorption rates will be 7.5-8 months; a 25% increase from today.
5) Better or worse for who? It's all perspective.
6) It will continue to be a buyers market.
7) We'll see a 30% increase in foreclosures (locally).
8) Home prices will continue to slide... perhaps leveling off in June/July.
9) Condo prices will remain relatively stable; if not increase slightly.
10) Commercial; industrial/retail will continue to stay strong; retail/office space will limp along.

I see the year ahead as a very bad one for the real estate industry and when things are bad for the real estate industry, it will be bad for the mortgage industry. 

I haven't changed my mind about a minimum two years to find a bottom, perhaps 3 years.  We've been 2.5 years in recovery, but only 1 years since the industry recognized that there is a problem. 

1.  Higher. 
2.  Tighten
3.  Down
4.  Increase
5.  Worse
6.  Buyer's
7.  More
8.  Fall
9.  Free Fall
10. Soften

You've inspired a post.  See you later. 

Fairbanks, Alaska Realtors Jesse & Kathy Clifton  Thank you for responding. I know different parts of the nation will be be slightly different.

Homefinders, Real Estate in MD & VA, Lenn Harley, Broker, New & Resale Homes  I think you are right about condos big time!  They were the most exaggerated segment of our market.

Here are my thoughts - as a mortgage banker in CT.

1.  Rates should stay about the same.  It usually seems that during a presidential election year nothing moves to dramatically up or down.

2. Credi will continue to tighten.  The clients with the good FICO scores will be fine.  Everyone else will find new challenges.

3. Number of agents and mortgage people will drop.  Not enough business for everyone to make a living.  Also, license fees for Realtors will push people out of the business.

4.  Real estate inventory above $300,000.00 will grow.  Below that level there is good activity with first time home buyers.

5. Gradually better as the bad loans flush through the systems.

6.  Definitely buyer's market.  Not a good time to be a seller.

7.  More foreclosures - Lots of people having problems with no easy resolution.  CT Families and FHA Secure are not working well  - yet.

8. Until the inventory comes down a little I think prices will stay the same around here.  Employment is still strong in southeastern CT.  As mentioned above, the lower end of the market is doing OK around here.

9. Same as above #8

10. Not qaulified to speak on this one.  My expertise is strictly residential.

Good post - Thanks.

Jim I like your outlook for 2008.  The hardworking agents will survive (and even do very well!)

I'm going to do like Lenn and write a post.  I'm posting it to the official A/R predictions, too.  I think that you are spot on most of it, but I see a few key differences... but hard to argue your experience... very hard indeed.

Jim, considering the  answers you gave, seem to agree.

Mortgage Rates Lower or Higher?  They will stay lower.  Raising the interest rates will slow the market even more.

Credit Loosen or Tighten? Credit will tighten.  I'd like to see programs for first time home buyers improve.

Numbers of Agents in Your Market Up or Down?  Agents will continue to rise, only a few will drop out.

Real Estate Inventory Levels in Your Market Increase, or Decrease? Our market will continue to increase....maybe not as much as other parts of the country.

Better Real Estate Market or Worse? For all of us, I wish for a better market.

Buyer's Market or Seller's Market? It will continue to be a buyer's market.

More Foreclosures or Less? Foreclosures will continue to rise at least another year.

Homes Sales Prices Flat, Rise, or Fall? Prices will continue to drop if inventory rises.

Condo Sales Prices Flat, Rise, or Fall? Condo sales will remain the same.

Commercial Real Estate Stay Strong or Start to Soften?  Commercial will continue to rise.

Hope you have a wonderful new Year

PHILIP TURNER-MORTGAGE BANKER SINCE 1980  Thanks for your response!  Commercial I see some excess in retail, and office space. It is not my expertise either, but I cannot miss a lot of commercial vacant properties building.

Matt Clark  All real estate is...a cycle!  It is not all up, nor is it all down!

Lane Bailey - The REALTOR for Car People  Thanks!  It is going to be interesting.

Kay Van Kampen Springfield Missouri Real Estate  Kay thanks fo much for your response!  In the Atlanta area agents rose from about 8500 to 45000 in a few years A 300% increase.  Sales may have risen about 20%. Now sales have dropped back to sales levels that existed in the early 90's 3600 sales a month.  Inventory should really be about 48000, but has risen to 85000 and remained there.  Even though prices did not go crazy in Atlanta, the sheer inventory volume will move prices down.

James - Lenn Harley sent me. That is supposed to carry some weight in your world. If not, I do believe I can scratch together enough jing for admission.

Ten questions -

The answer here is yes. Mortgages rates have always been on a roller coaster ride. They come down and they go up. It is really tied to the availability of mortgage money. All the hoopla is boiled down to supply and demand. 

I hope that the current tightening continues. The only way real estate value can increase is if someone actually owns some of it. If it is all financed it becomes just another commodity. Part of our current problem is folks are trying to pay mortgages and they actually can't afford the toaster.

I think the number will decrease, but not as quickly as some may assume. In this market, one sale can provide enough revenue to stay active two or three years. The integrity of many on the fence is closely linked to those that really belief lightning will strike again. If lottery ticket sales decrease, I will believe the number of agents will follow suit.

There is a limit to how many bricks we can pile on any area. The amount for sale will increase until such time as the prices come down to a point that make the inventory affordable. There is little affordable inventory and a great deal of over priced inventory.

Hell James, the market is never better or worse. It is what it is. The advantage seems to swing back and forth between buyer and seller. The agent that recognizes the market will always have a good market.

It could be a buyer's market if prices were lower. It could be a seller's market if they dropped their prices. That seems to indicate it is a stagnant over priced market.

There will be more foreclosures. The raminfications of loose lending have not been totally felt. The combination of increased inflation, level income and lenders looking at shrinking bottom lines will result in more property going to foreclosure.

Sales prices will have to come down. You will have to dig to see the truth. Some individual sales may occur that appear to indicate higher prices. Don't believe stats that do not tell the entire story.

God only knows what condo sales prices are. Builder incentives and money forefeited used to reduce sales prices make this a big old pot of pricing gumbo...you don't know what is in it but you keep coming back for seconds. Condo's are entry level, they will always have a market.

I am not part of the club. I don't know enough about commercial to comment. I do know that they have been building and rebuilding commercial space in this area all my life.

That is my story and I am sticking to it.

Pretty much agree with all of your assessments. However I think in number 5, I think the market over all will be flat the first half of 2008 with an improvement in the second half of 2008.  Too mnay buyers out there now just sitting on the sidelines. I do see them starting to get back in the flow of things once the new yeaers starts.  Cdall me optimistic I guess!

John MacArthur  Thanks!  I love Lenn I think she is the greatest!  I like your response, because you have provoked my thoughts with the way you responded! 

1. I agree that agent numbers will drop but not over night by any means.
2. It really isn't a buyers market because of lack of credit and inflated prices.
3. Stats are not the entire picture!  I like that!  (As in Median house prices!)
4. "The agent that recognizes the market will always have a good market."  Great quote!  I totally agree!

James Lockard - Realtor, Allendale, NJ  Thanks for your response! As far as # 5 here is my concern.  What started a lot of the spin in 2007 was the mortgage resets on many sub-prime loans.  In 2007 there were about 50 billion in resets that caused most of our trouble.  Next year the amount of resets is 10 X higher.  There are 500 billion in resets due in 2008.  That is where I see murky waters, and more trouble ahead.

Excellent predictions Jim, and more in line with what I would expect for the coming year. Have a great 2008!

Ryan Hukill - Edmond, OK Homes & Real Estate  Ryan best wishes in the coming New Year!

Jim,

Great questions... I'm right in line with your answers.  I think that this will be the year that "amateurs" as I like to refer to them, will be getting out of the business.

Debbie Summers, REALTOR®, Lake Mary, FL   Debbie from your lips to Gods ears!  LOL!  Happy New Year!