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The Coming Year 2009 - Changing Trends - Predictions.

I've been in real estate long enough to make some predictions based upon my experience in the business, and trends I've come across. The predictions are not so much based upon sentiment or what I want it to be, but in rising market times, falling sales prices, and other ominious growing trends. This year in retrospect will most probably go down as a transition year. 2008 will be viewed down the road as a year of great change, and big movements. Most of us in real estate started to see changes in property values, lower prices due to high volumes of distress sales, and high fuel costs that have recently just ebbed. Could 2008 have been a major turning point in the way we live, invest and prioritize our needs? I think so. The extremes this year have been so big, so dramatic, and life changing that there are many lessons that can be learned if you paid attention to the events. Here are some thoughts and observations I have made for myself. I would love to hear your thoughts.

Some of My 2009 Real Estate Predictions:

2009 will be a turn around year. Change will be dramatic.
Individuals will be more frugal. Mid range prices will rule.
Insulation, heating, cooling, and environmentally friendly will matter.
Price will continue to drive the market.
Location, location will be a priority. Short commutes, convenient, best schools.
Fewer home sales including a drop in the sales of foreclosures.
There will less emphasis on luxury, and more on practicality.
Luxury home foreclosures increase dramatically due to Alt - A resets.
Smaller - energy efficient homes with will be in demand.
The luxury end of the market will have the greatest corrections in price.
Condo and town home markets may be the last to recover.
Second home markets will suffer - due to financial necessity of individual's relocation of assets and financial priorities.
Builders will build less spec homes.
Commercial real estate problems will replace residential.
Loans and credit will be harder to obtain.
Appraisals will rule.
Less buyers qualifying due to credit issues (Credit card debt, slow pays)
Fewer buyers due to bankruptcies, and foreclosure - damaged credit.
Foreclosures will be sold in bulk lots at deep discounts.
Absolute auctions will mark the bottom and beginning of the upturn.
The real estate market will start to bottom in the later 3^rd quarter, and 4^th quarter of 2009.
Real estate listed inventory in single family homes in many areas will start to level out mid 2009, and gradually decline.
Buyers will need 20% down - must have best credit scores.
Selling commissions will increase.
The numbers of real estate agents and brokerages will free fall.
Mortgage rates will initially decrease, but start to rise.
Unemployment will peak in the 3^rd quarter 2009.
Luxury autos out - practical fuel efficient cars in.

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Posted by Jim Crawford ~ Atlanta Real Estate-ABR E-PRO on 11/20/2008 03:37 PM

Comments (155)

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155 Comments on The Coming Year 2009 - Changing Trends - Predictions.

NOV

Oh my, I hope your predictions are wrong! Maybe just wishful thinking on my part but we need a miracle to happen. I am always interested in other opinions, thank you so much for sharing yours.

Oh my, I hope your predictions are right!

I'd like to sleep through 2009 and just get on to 2010. I'll think about it and make a list.

Jim

What is the relationship between average house prices and average salaries in the US?

Here property prices tend to come back to 3.5 times average income which means more falls in 2009 (2008 prices will be down 20% on the pre credit crunch peak)

i agree totally with practically everything on your list. You've obviously put a lot of thought into it. I also belive that once the recession ends it will take a full five years before the economy returns to stable conditions. Good thoughtful post. Thanks, David

Most of what you are saying is already happening here in Maryland. When representing buyers in today's changed market I would highly recommend including an appraisal contingency even if you think it is priced right since I have seen and been a part of a few deals that wanted that dreaded last second review of the appraisal. Make sure your buyers are protected...

I agree with your list. Thoughtfully presented, too. Not so happy about the comment on secondary home markets, though, as that's where I live! I can see that you are correct, though.

Valerie Springer Mortgage Loan Officer Expert in Financing Purchase & Refin (Benchmark Mortgage) I hope it does nto come true either. However, this recessions is like nothing I have ever lived through. This is epic in every sense. Unemployment is just starting to rise, and sorry folks the banks are not going to rush to give a loan if they think you cannot repay it. That is only one aspect of it.

Lenn Harley Homefinders.com MD & VA Real Estate 2009 maybe the year of the the real estate sabbatical. I may choose to hibernate through it.

Roger Hollingsworth- Great question, unfortunately America is so diverse, but the trend is that housing prices have pushed too far beyond the ability of the average worker to buy. So prices still have to come down to be in a normal market. They cannot let prices rise, because that is inflationary.

David W. Langford (PrimeLinx.com) It is going to realistically take a while. This is not an overnight fix.

Michael Klijanowicz - Relocation Specialist - Baltimore & Harford County (Baltimore & Harford County Maryland - Long and Foster ) I think even if a buyer is paying cash they should have an appraisal contingency. Price is amoving target these days.

Li Read at Sea to Sky Premier Properties I have nothing against second homes but on the personal liquidity side - primary shelter and covering the cost of their basic living expenses. This has occured in each recession.

Good list. Is it 2009 yet???? Almost. We can make it!

Erica Ramus - Realty Executives - 570-622-6006 Real estate will always be brought and sold. People buy when they have money and confidence. In the last 2 weeks as of yesterday there was a 150 billion dollar loss in wealth. That is not counting today's disasterious numbers. It will have a very big impact on the economy shortly. It will be unavoidable.

Jim,

Overall home ownership will decline as mortgage underwriting criteria remains tight, which actually corresponds more closely with what the average consumer can afford.

Jim,

I like the this. No sugarcoating. Just the raw truth.

I understand the need for being positive. I think it is very important to keep your head up, but as small business owners we have to balance that with an honest assessment of the market so that we can make good business decisions.

Great Post!

Hi Jim, A sobering, and insightful list. Many of these coincide with my own thoughts, and others never even occured to me. For example, selling commissions increasing. That may have to happen if any of us is to remain in business.

Thanks as always for a thought provoking post.

Debi

Hi Jim, I like some and disagree with some. All together I feel as you 2009 will be a much better year. Rich Charlotte NC

Hi Jim,

I agree with a lot of your predictions. I think consumers need to come back to reality and realize that using credit cards and home equity lines only puts them deeper into debt. People have been buying everything they want for many years and now it's all catching up to them and to many of us.

It's time to pull back the purse strings and think "do you really need it?" before you buy.

As for real estate sales, 2009 could be the year of mass exodus for agents, those who can't make it. It should open up more opportunities for those of us experienced enough to perservere.

With default rates still rising, not even counting those who just lost their job today, I would extend out the "bottom" for our market to beyond 2009 and into 2010, as until the defaults slow down, thus slowing foreclosures, I can't see how we can say a bottom is only 2 or 3 quarters away. Of course, so much can happen between now and then.

Second home markets will suffer - due to financial necessity of individual's relocation of assets and financial priorities.

Hey Jim,

I think you hit the nail on the head with that prediction. Two of my clients are reporting that exact situation.

Respectfully,

Bruce

P.S. Do you service the entire Atlanta metro area?

Selling commissions will increase.

Now THAT'S a great prediction! :)

"2009 will be a turn around year. Change will be dramatic." I hope you are right.

"Individuals will be more frugal." I hope so. People have grown more wasteful.

My predictions: I don't know. What has happened lately seems to have caught most people by surprise, even the educated people who run our government. How can this be?

Esko Kiuru - Las Vegas NV Mortgage Consultant (Sinifox Financial) You are right. Next year will refelect the consumer. The consumer will not be floating with cash next year, and we must also remember credit, and credit cards will contract.

Lovejoy Team (Re/Max Alliance) Realism is an important perspective to possess.

On some of those points, I hope you are right "Selling commissions will increase", but we need buyers and sellers to get paid. I need to watch "The Secret" everyday in order to stay positive and bring the law of attraction to me ~ with good vibes and make 2009 the best year that I can! I am determined to make it in this challenging market. It's an opportunity that is very educational on each and every transaction. I will be one of the few that will survive this storm!

Woodland Park Real Estate, Colorado - Debi Boucher (Realtor-Prudential Professional REALTORS, ASP REALTOR) Thanks. Commissions for those that can demonstrate ability it will be EZ to command. Sellers want results not an MLS listing agreement.

Rich Ferretti ABR QSC Realtor/Broker Charlotte NC Mint Hill NC Relocation (Southern Winds Realty-Mint Hill North Carolina) 2009 may be much better, but it will be late 2009 for the entire economy.

Dan Weis - Cincinnati Real Estate (RE/MAX Unlimited) The pull back in consumer credit is not a voluntary effort. Credit cards will pretty much seize up in the early part of next year. Much higher interests, denials of credit, and overwhelming credit card company losses will create its own path. This credit card crisis has just started to blow up.

Team Carroll Cranford NJ,Westfield NJ Scotch Plains NJ Real Estate (Team Carroll - RE/MAX Classic Group) For many in theis nation thay are not even factoring the last two weeks on Wall Street into the economy. The losses are pretty much historic. Prior to yesterday the dollar loss on Wall Street was over 125 Billion for the previous 2 weeks. I wonder what yesterday and today's slide has eroded in wealth? That is a tremendous loss of wealth.

Not Yet Licensed Secondary homes are descretionary income - and most likley in the first cuts of personal budgets. I mostly work northside of Atlanta - sometimes Decatur and north.

Shirley Parks San Antonio Real Estate & Luxury Homes (RE/MAX Realty Advantage, San Antonio, TX) I think it was a political tool that they held off until just before elections to use as a tool. The information was so overwhelming it is hard to ignore for even a blind person.

Johanna Roy (Edina Realty) I know many very positive real estate agents whose brokers just failed. Being positive is one thing, having a plan to survive is better.

Nothing like the plain truth, which is what the public needs right now. The media has been feeding us either bad news or half-truths. Thanks for your observations. I've been telling many of the agents I work with that this is what the future holds. Buckle-up, work smart, and we'll make it to the other side. I can't wait until we can print T-shirts that say "I survived the Financial Crisis of 2007, 2008, 2009"

Hi Jim, Very well presented overview. I suspect ( hope ) that some of them do not apply to our area. We are a resort/destination market and some of your ideas may not fit us.

I think it's thawing! In the past weekend we put 3 properties under contract and are negotiating deals that should be signed on 2 more. That's 5 in one week when in the past 5 months we didn't see 1 a week.

Dave Andrews (Landover Mortgage) In the 1990's when we were on a listing appointment with sellers that were upside down...there was an industry joke that said "If you Bought in '88 I Can't Help You!" This current market is far worse, but we will get through with it. We will survive!

Bill Gillhespy Fort Myers Beach Realtor (Century 21 Tripower Realty) Thanks Bill - this is just a general list.

Hi Jim,

Well said I agree with almost everything you said - but I don't think the market will bottom in 2009.

I have been tracking the supply and demand for real estate for well over a year now - I do it on a monthly basis. The data has shown that many markets hit a "bottom" in the 2nd quarter of this year.

This economic crisis is going to change that trend and I am not sure if we will see a bottom in 2009 with all of the job losses and continued mortgage resets.

Erica Ramus - Realty Executives - 570-622-6006 That is always encouraging news. Right now we are going to have to get them past closing... When the stock market moves that much, buyers in areas clear across the country will suddenly find themselves unemployed. We must be vigilant - quick closings, and solid credit buyers. This is not a marginal buyers market.

You're right. I'm negotiating one now where one buyer put $1000 down, and the 2nd one 10,000 down. Buyer 1 is 100% financing, and buyer 2 is financing only 60%. Which one is more solid?

Seems like everyone will be much like New Orleans has been for 30 years or more. I guess all the other markets come back to you. its not odd that history tends to repeat and we never learn. maybe you guys can have Mardi Gras and various events where you can enjoy yourself for little money.

I agree with your list, very well put together! However we always have to keep in mind that we cannot gereralize in the Real Estate market and some areas will start improving by the end of the first quarter of 2009.

Jim, I agree with most of your predictions as we are starting to see more buyers looking for a Home and not a piggy bank. The bulk sales of foreclosures may be a regional situation as we are still selling them rather quickly as the lenders are listening when it comes to pricing.

Erica Ramus - Realty Executives - 570-622-6006 As long as they have credit, and a job or verifiable income they will be in a good space. I was referring to an unforeseen closure or layoff. When Lehman Brothers failed, I believe one of their holdings was a natural gas brokerage in the Atlanta area that provided natural gas to all the municipalities. The entire operation ceased. No one expected it. In the next 2 weeks after the fall out of this weeks stock market companies will start closing offices and businesses. It is unavoidable. Some of their employees may have already entered into a contract to purchase a home and will not be able to proceed.

I agree a more frugal nation all around. The question is how will the Federal government make it with less tax receipts when they are already spending more than they have?

Eric Bouler (Prudential Gardner) Thanks Eric. I agree.

JM Padron, CCIM, CRB (REMAX PREMIER ASSOCIATES) No we cannot. Nor can we fall into the total beleif that is is totally local and not interdependent on other real estate markets. If a seller cannot sell a home in Boston, Chicago or New York, they cannot buy in your market. All markets are affected,a nd some are much worse than others.

Cameron Wilson: Murrieta/Temecula/ Menifee California Real Estate (Century 21 Tri Valley Realty) Bulk sales may be needed to remove large blocks of available inventory.

John Walters (Specialized Real Estate) They will raise taxes. It's coming.

Jim: I like these and agree with most of them. I disagree with buyers having to put 20% down. I believe buyers will be able to put down as little as 3.5% (New FHA loan rules next year) or 5% for conventional loans. I do agree credit will remain tight and don't expect much of a rebound until the second half of the year. Thanks!

I think we are seeing the free fall of brokerages and agents in my area already. We have had two title companies downsize and one just closed it's office and moved what staff they kept 20 minutes up the road. Today a 20 agent office in Bend, OR closed and last month a Re/Max franchise with 55 agents and employees closed it's doors. I truly hope it doesn't come to buyers needing 20% down, but I have to agree with most of what you have said!

Paul McFadden Mortgage Loan Originator Renton Washington Mortgage Loans (Exact Financial Group) Government loans yes with less down. Credit may remain tight for a while.

Cat Zwicker-Grant, P.C., your Central Oregon Real Estate Professional (Desert Sky Real Estate, LLC) I spoke today to two agents in other states one brokers is closing his doors, and another is closing offices that have been open for years. These are not isolated cases by any means.

Jim - Great post; I admire you making your predictions early; please let us know what your "batting percentage" is this time next year.

I appreciate you.

Jim. I have to agree with your predictions I have been troubled by the second home slow down, but still agree we are all in for a tough ride. But I'm staying (and will be working my profession long after some agents call it a day) so we'll talk again soon. Steve

Jim, I hope your predictions are right. I think it's time for the whole nation to tighten it's belt. Some of the items on your list would be a great improvement.

I agree with most, but I am still betting on 2010 before it stabilizes and 20% is harsh maybe 10 but it lenders require 20 no one will be able to buy. Equity has dropped for most here below 20% so even the ones in the best of shape couldn't buy. I do agree that frugal will be the key word. I also think you will see a power struggle of some kind comming from an outside influence, of civil war type proportion.

Jim,

Great list! It seems to me that if buyers (of all things not just real estate) had been more frugal a long time ago and placed less emphasis on luxury items, (of all things not just real estate) then many of the items on your list would not have to be included.

I think it depends on where you live. Denver was in the foreclosure business two years before most of the country. You guys were going through the roof and were were in the pits. Our inventory has already dropped significantly in the past 18 months and prices are irresistible to buyers and investors. Good luck to us all.

Written like a wise man. I think we are already seeing more frugality. I heard spam and jello were selling like hot cakes. I only hope you are right about the market in 2009 that would be an improvement for us in MI.

Jim, you have a lot of predictions that we would tend to agree with ! It certainly will be interesting as 2008 was interesting enough : )

I'd like to add another item:

Real Estate offices will be streamlined (eliminated) and many agents will be working from their virtual (home) offices -- brick-and-mortar offices will be closing down like crazy.

Regina P. Brown
Allison James Estates & Homes
www.ReginaBrown.AllisonJamesInc.com

Our inventories are down. Prices are down somewhat, but have stabilized in a few of the suburbs. I've had over 20 showings on my two newest listings, so there ARE buyers.

I was told that there was a 7% reduction in agents this past year, and they expect more to drop out since the 1st round of dues are due in December. Some agents are down 50%, others have sold very little. Around 300 brokers have done less than $2 million which is very little for a broker.

The last two buyers I've had or currently working with, have put 20% down. Both are single gals.

Historically, Columbus generally weathers downturns better than other cities because of the diverse economy. It doesn't rely on big manufacturing. We have headquarters for insurance, banks, fast food, and software, PLUS the biggies are the state gov't and OSU. And a lot of the Honda execs live in the outlying suburbs and Honda gave a news report a few days ago that they are doing just fine with no plans to layoff people. (not unionized).

I dropped off some papers at my stock broker's office today. TALK ABOUT LONG FACES!!!!

Jim: They are probably great observations. Most of which is in motion. Only one thing, I hope you are right about people staying with more practical autos. I think in that you mean, fuel economy as a main part. With oil gong back down, we may forget and start guzzling again. That would be bad.

Good post.

Richard

Bobby Wallace (Charleston Real Estate Investor's Assoc.) Thanks Bobby.

Steve Loynd, Alpine Lakes Real Estate Inc., Loon Mt, NH I know we are in for a tough ride, but I am working now on expanding my web presence now. Sooner or later buyers will come out and search the web looking for homes.

Erika Rogers (St. George GMAC St. George Utah) I think we are feeling it more right now because nothing is kicking in. Sooner or later it will.

Charles Stallions Real Estate Services I think before this is all over that is how far the pendulum will swing - 20%.

Barb Szabo (RE/MAX Trinity) I agree. Maybe the excess in the 1920's was also why it was called the "Roaring Twenties!" That was built on easy credit too.

Steven Beam (RE/MAX Alliance - Parker Colorado Real Estate.) Thanks Steve.

Missy Caulk-Ann Arbor- Realtor(R)- Ann Arbor Real Estate (Keller Williams-Ann Arbor) A bottom will be good, but it cannot be a false bottom If the government tries to prop up the prices artifically they will prolong this event and drag it on forever.

Christopher and Stephanie Somers - Realtors - Philadelphia Real Estate (RE/MAX Affiliates) As long as 2008 don't seem like the good old days.

Allison James Estates & Homes I agree. Virtual offices will be more common.

Elaine Reese, REALTOR® in central Ohio (Real Living HER, Worthington Ohio) I think a diversified economy is a big part of the recovery picture. A little bit of everything. Areas that were perhaps just insurance, just banking, just manufacturing may have bigger issues. It is like the old saying of a "Company town" If one industry fails, you have a 'ghost town.'

Richard Stabile Bergen County New Homes Builder Realtor (REMAX real estate associates) I agree. I think the new reality that money does not grow on trees is going to alter how we spend money. Not only are we going to be frugal when buying an auto - it will be an efficient machine. I also feel that buyers will buy for their needs, and opposed to buying a show home. Heating bills, water consumption will all be in play as we have less disposable income. In many ways, there will be a lot of good that comes from this downturn.

Jim, Interesting reading and for many a sensitive subject I am sure. The market continues to shift and there are many financial issues that are yet to be resolved. 2009 will be a very interesting year.

Jim,

Thanks for the post. I would certainly agree that 2008 has been the starting for all sorts of corrections across the board.

Jim: this is a great list. I'm sure many things will prove to be true in the year to come

Good list you got going there Jim. Will have to read through it again later. Will add any omissions if possible.

NOV

Sam Miller (RE/MAX Stars Realty I thought 2008 was interesting enough! LOL!

William Collins, Broker Associate (ERA Queen City Realty) 2008 is kind of very scary in the sense so mush has happened so quickly. 2008 is not even over yet, and we can not write it off yet. Let's keep our fingers corssed the worse is over.

Roland Woodworth "Clarksville-Fort Campbell Area Realtor" (Exit Realty Clarksville) Like everyone else, I am looking for a bottom. I know in my heart we are not there yet.

Castellum Realty - Lancaster real estate - homes for sale in lancaster county PA (Castellum Realty LLC. - International Real Estate Brokerage) Thanks...please do!

I can see where some of this may ring true, but I'm feeling there will be a slow turn-around in 2009.

It sure will be interesting to look back a year from now and look at the real estate landscape and see what happened.

I think you're right on---just read an article in the Saraota Herald Tribune about a company who is buying up bulk lots in several states. This will go a long way to reducing lot inventory.

Jason & Amber Gardner (John L. Scott Real Estate) Thank you for your thougths.

Morgan Evans-Your New York City Expert (Prudential Douglas Elliman) For those surviving real estate it will be an interesting retrospect.

Diane Bell, Hilton Head Real Estate, Bluffton (Charter 1 Real Estate, Hilton Head, Bluffton, SC) Excess inventory in so many levels, lots, homes, condos, commercial has to be absorbed before we can get bact to business as ususal.

Jim, I agree very much with many of your predictions. I do think clients will want homes closer to where they actually live their lives. Efficiency and green features are here to stay. More money down and better credit scores. Fewer luxury goods for the middle class.

Jim... I agree with most of what you predict. However, I can't yet see 2009 being a "turn-around" year. My prediction would be more like 2010. But when our market does come back, for those of us left, I think it will come back with a vengence. We'll be busy because there won't be nearly as many of us... for awhile. And so many builders and spec homes will be gone, we might even have some "bidding" on what's left. One can only hope, but I'll be around to see! Good post.

Change is coming!!!... LOL!!!

Jim..... this was an excellent list... longevity, experience, and knowledge did allow you to come up with a strong list for 2009. And as Bill Blair said, I see the turn-around time be 2010. I was asked to write a 2007 mortgage year in review for AR back on Jan. 2nd of 2008. I predicted by the end of 2008 that rates would be around 6.75% or so, using the same cost for that rate as it was on Jan, 2. And we are just about there. I concur with you that rates might dip a tad again, but ultimately rise. I see in 2009, the same cost for 6.75% to be around 7.25% for about 5 months off and on in 2009. But yes, I think that it will be 2010, when or if we recover, and this was in my prediction from my 1/2/08 post.

In regards to this statement that you made.. "Insulation, heating, cooling, and environmentally friendly will matter."

What's sad about that prediction is that it shouldn't have taken a bad economy for people to realize this. I have been trying to make an effort just with your basic home items for the last 2 years. There is a great program with FHA that allows you to buy a house and roll in the costs to add eco friendly things. I have written about this twice. And you get the same interest rate as you would if you just did a regular FHA loan. This loan is not like the 203-k loan, with a higher rate.

The only major thing that I disagreed about in regards to your predictions was this statement.. "Buyers will need 20% down - must have best credit scores."

I would believe that FHA mortgages will never go any where. Sure the pools of money from investors on this product might shrink some... but they are making a change for 2009 to where you now have to put down 3.5% as a down payment... that all goes to the down payment. Currently it averages about 2.25% down, with a total of 3% coming from the borrower. Our market could not sustain 20% down..... we would crumble and real estate would be dead. Then the rebound statement will never happen. That is just my .02. We have so many grant programs that people aren't aware of... we need to be educated about this and use those resources. Another great thing about FHA, that you can still use these grants for your down payment.

Overall, excellent post with some excellent topics for discussion.

jeff belonger

PS... Jim... this other statement... "Unemployment will peak in the 3^rd quarter 2009."

It will be peaking all of 2009.... it has already started.... especially depending on what happens with the Big 3.... I wrote a post yesterday titled "inflation vs deflation"..... loss of jobs are a big part of this... again, great post. Now, the next one that comments, will be #100... ;o)

jeff belonger

About time stuff like this happens. Takes a major turn of events to get the ball rolling in the right direction.

Brenda Carus (Re/Max Towne Square Realty) Thanks. There was a time that luxury homes were for buyers with big bucks. EZ credit opened many new doors in the Chamber of Horrors, and as we now know it could not last. It is going to be very painful for many that are in denial. Cash, savings and moderation will be the rule for the coming decade. I hope at some time people will once again see the wisdome of owning homes "Free and Clear" as a smart goal in life!

Bill Blair (RE/MAX Agents Realty) 2009 does not mean it will be without pain. The next few months will be critical.

Las Vegas Real Estate - Paul Francis, CRS (Prudential Americana Group) - Like A Freight Train!

Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages -- Mortgages (Infinity Home Mortgage Company, Inc) Thanks for your insights. I guess EZ money made price no issue. Who cared if a home was efficient? It will matter now even if energy costs are down.

As far as the 20%down - I was remembering my first home in 1979 - you could call banks all day long and find no onw was writing loans unless you were a big depositor or had 20-30% down. This will be hte pendulum swinging. It will go in that direction for at least a little while at some point.

Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages -- Mortgages (Infinity Home Mortgage Company, Inc) The conservative unemployment numbers are going to peak at about 11.5%. I think that will be an easy hit as the reality of high mortgages payments that cannot be met, high credit cards thatcannot be repaid, and the high style of living that many of us have become so accustumed to cannot be realized. I still feel this will peak later next year.

Jon Huther Albany NY Homes - Albany NY Realtor (Nick DeMase and Associates) It may be very painful - but in the long run it will be a good thing. Housing will be more affordable, you will be able to negotiate the price. The payment will be more manageable, and that will allow you to purchase other things.

Think about it: High price of homes = high mortgage payments, high credit card payments, high auto payments, tuition, college, SEP IRA's, health care...etc! Saleries never kept pace with allof this. Where was this all going to end up?

I will save this and track your glass ball forcast. Thanks for sharing.

Jack Climer Realty, LLC Thanks Jack! Have a great one!

Jim. - Great list, but I don't see anything on the horizon that would jeopardize the FHA program of low down payments and credit score issues.

Good list except I already know this won't happen: Buyers will need 20% down - Two reasons: One the FNMA letters are already out and Two it would be one of the most ridiculously insane things that could happen to what's left of the housing market.

Being an ex-actuary, I enjoyed reading your predictions (not as much fun reading as a realtor but it is the hard reality taking shape). Thank you for your insights. Let's hope that the country and the people all come out stronger in 2010.

Fred Doleac - Virtual Homes, Inc. I agree, but it does show you that consumers do not have cash..otherwise it would be at 5%

Ken Cook - Market, market, network! 678-946-0101 You got a point there!

Gerry Khatchikian, ASA, TRC (Prudential Red Lodge Real Estate) Please God. Things will work out.

NOV

What a blockbuster post Jim, I hope that your predictions are true or at least some happen...

Paul Henderson (RE/MAX Professionals Well I kind of wish none of them come true. I would like to see things go back the way they were...that certainly is not going to happen.

Wow. I did not know you had the crystal ball. If so, you should make a 10 figure income in 09.

The one thing that I have learned over the years that it is totally impossible to predict human behavior and the market shifts when you are not prepared. If you are that confident, then put every dime you have in the stock market and real estate....margin it and you will retire next year.

Yes, a bit sarcastic, but the reality is that no one can predict what will happen....no one. If we end up entering a socialistic system as one leader dreams, you will be dead wrong...as I and many small businesses will be out of business in a year.

This whole market is watching what the big O is going to do and the market is showing that it is terrified. God willing he said what he said to get elected and not to actually implement what he preached. If he does, most of us who have built large operations will have to chose another business as we do not have the luxury to raise prices as most industries as this industry has an implied ceiling.....

NOV

Tim Moncrief (Keller Williams Realty (Bartlett Real Estate Group)) Not a quick enough turn around? I totally disagree with you. What magic trick an "O" pull off to have things totally turned around by next June? Share them. We are in a deep mess because everyone chose to ignore the facts and figures. There were those that predicted all of this. As a nation we did not listen to them. We listened to the pundets instead. I used to work on Wall Street, and I also pulled economic research in a Commerce Library. Yes the numbers we are seeing are that bad. If anything my own post is conservative, it may be much worse. In fact there are entire networks of real estate companies that could possibly be falling off the cliff in the near term after a default on payments this week.

Jim - Congratulations on a well deserved feature... I think that you are on track with many of your predictions...

Hi again Jim! I think you're right on the money (no pun intended!) with your predictions. I do think that one of them, the condo/townhome market, may be different in each market. As you said, buyers are going to purchase in areas for location and the commute for us to Uptown is a huge driving force behind young professionals and their home purchase decisions. I think in our case, the condo market will be the first to recover as they are priced where the first-timers (which I think will rule the market in '09) are drawn to purchase--in our Uptown area. Some even opt to forego their auto ownership while living in our Uptown area. That's the only difference that I see in our markets right now.

Happy 2009! ;-)

Debe in Charlotte

OOPS! I forgot to congratulate you on that little gold star! Well deserved, my friend!

Debe in Charlotte

Debbie Summers - Move To Lake Mary! (RE/MAX Central - Florida) Thanks. Just like anyone else I am trying to make sense of this all!

Debe Maxwell (Helen Adams Realty) I agree there may be local areas that Condos are OK, but most of us forget before the bubble burst - condos were identified as way over built, saturated, speculation etc. In Atlanta, I will no longer consider listing them. They are that bad. I still say that - condos nationally may be the last to recover. Thanks for the mention with the star.

NOV

Only time will tell but I have to agree with your predictions Jim. I do hope things get a little better by next summer. People will definitely become more frugal and it's about time!

NOV

Jim-As usual a great list and post, Have a great Thanksgiving.

Joe Federico

DEC

Jim, Great predictions. I Hope the California market starts to turn in the second quarter though!

The predictions started out good and I mostly heard "turn aound year" but then the "less buyers" and "harder to get loans" "20% down" is hard to take - although I have been seeing that a lot. Those of us that survive the market will be in good shape for the up turn. Thanks for the eye opening view of 2009.

DEC

I agree in general. I think the first half of the year will look alot worse than the first half of 2008 while the second half will look a little better than the second half of 2008. The upper end price ranges will be very sluggish. I think 2010 is when we have a chance to start a slow upward climb. We'll see! Take it one sale at a time and watch the bottom line!

Dave

Very interesting predictions. More important than ever to price houses correctly from the start and don't be afraid to Just Say No to some listings.

Dave Sansom The more I learn about the market the more I realize that the banks, and the government are placing a lot of spin on this. Prices have to correct to more forward. End of story. Once homes are affordable again, people will buy. Sellers that purchased their home with no money down in the last few years are going to take it on the chin. They overpaid, and will not recoup that in the short term.

Kelsey Barklow - Northeast Tennessee Realtor (Crye-Leike, Realtors, Johnson City TN) If I cannot list on my terms in this market, I do not want the listing.

One thing to remember is that all real estate is local. The timing of recovery will vary dramatically by community. There are many communities that did not have a run up in values, and so did not have a crash.

Not agreeing with you on a few points. After this year I don't feel comfortable giving my opinion or trends on ANYTHING or points of the future market in 2009. Nothing has followed any trend from the past so I am going to try and stay optimistic that things will correct themselves as they have in other horrid years (1981?). Condo and townhouse markets are the only things selling around here and even in your area will be the more affordable options for buyers entering the market.

Very good list and I agree with most of the points. I don't think we will get to 20% down as a requirement though. There will always be a place for FHA, USDA, VA and even conventional loans with 5, maybe 10% down maximum.

However mortgage insurance will be more expensive and there is a premimum already for <20% down. Lenders will keep adjusting pricing for the risk they take... that was one of the major issues that went wrong. Lenders not only offered risky programs with weak underwriting, they did not price in appropriate risk for it because money was cheap.

Tim Bradley (Contour Investment Properties) To a degree all markets are local, but they are also dependenat on buyers from other areas...that first have to sell their home there before they can buy here. Atlanta never had a major run up in prices but we are having a heck of a time right now.

Lyn Sims - Northwest Suburban Chicago Homes (RE/MAX Suburban) Condos and town home sales have totally collapsed here in Atlanta with last months statistics there were less that 360 sales in the entire metro Atlanta area. The reason being there are more defaults form the no money down - 50% are not paying their condo fees, and nor are they paying their special assessments. So that translates to an unfair burden to those that can pay. Their condo fees and their assessments are doubling. Those doubled fees are keeping other buyers out of the market as their prices and sales plunge.

Inner core major cities like... New York, Philadelphia, Washington DC may fair a lot better in condos and town homes because they are more a regular part of everyday life in those towns. They are not in suburbia.

Jim,

I like the list and think you've hit it pretty well. Isn't your first point a bit incongruent with the follow-on list?

I hope '09 is a turn around year. However, the conversations I'm having with big money private investors is that they're going to sit on their hands until '10. Waiting to see where things go. And when large amounts of investment money sit on the sidelines, that basically create a self-fulfilling prophecy. The markets will go south.

We've got three more waves of "issues" coming at us in '09. I'm trying to figure out how to thrive in the storm.

Roland Carrillo, PhD - VanDyk Mortgage Nor did many of these companies have any insurance on these loans. PMI was avoided by 80/10/10, 80/15/5, 80/20 which all = no money down, and no PMI! Not smart at all, and pure greed on their part. Banks cannot ask for a bailout when they purposely had unprotected loan sex with their clients. The knew the risks and waived their rights.

Hi, Jim - Well I typed this once, hit submit, and it disappeared. Hopefully it will work this time!

I believe much of what you say will be true, although real estate is local. More than ever though, these trends in larger markets will to some extent, affect markets that are more sheltered - especially the changes in lending rules.

An entire generation has been taugt that they don't have to work hard, save diligently, and wait for what they want. They've been able to get everything "now". There's some serious education coming up for that younger generation and some significant consequences for the next generation up that taught them these things. Many people my age are going to get hurt. More than ever, I am thankful for my husband's cautious, conservative nature.

Even with all that, I'm confident we will pull through. So much so, that in September I opened my own office and just a few days ago, signed a franchise agreement and sent everything off to expand my business. I will be getting back to basics and working on those long term goals.

Debbie White (Southeast Alaska Real Estate) Debbie..let me be the first to congratulate you! I am very happy for you, and know that if anyone can do well it will be you!

My Blog does not say it will be the end of the world for real estate as we know it. It will be more difficult, but not for those that understand it and work it as a full time job. Homes will always be bought and sold even in the worst of times...there will be an agent and a broker involved in many of those transactions. In Alaska, I know it will be you.

Jim, I just love your posts! Thank you. I hope the fuel efficient cars (and anything else that is green) will be an increasing trend. The EARTH knows we need it!

Elayna Fernandez - Marketing Expert - Naples FL (Designed 2 Impress, Inc.) I am very sure that fuel efficiency, eco friendly, and energy efficient will be the coming wave of good news that comes out of this mess! If it does not there is no hope for this world!

Jim, Great POST! I agree with almost all of it. I'm going to copy this and let's take a look at it in a year!

Gabe Sanders, Stuart Florida Real Estate (Premier Realty Group) Thanks! Glad you enjoyed it. Happy New Year!

I actually disagree with your 20% down theory...with FHA and VA loans out there, a buyer will still have low down payment options....I can't see that changing...especially not on VA loans.

Sonja Adams (Samson Realty, LLC) There is something wrong with the system when the only money out there will be government money. It doens't say much for the future of real estate. In the late 70's the mortgage money dried up...it is going to go back that way again.

How will they compensate for years to come with all the bad credit due to foreclosures, short sales etc? More credit? You really think so? The foreclosure tsunami right now is a direct result of not enough of peoples own money in the deal.

DEC

I see a lot of these coming true. So does my magic "8-Ball"

Mike Henderson (Genius Ventures LOL! I love it! "So does my magic "8-Ball"

JAN

I agree even though we could all wish for a better outcome! It has been very interesting to watch who has weathered and perservered this past year. Best of luck to you!

Tammy Carlisle-House I agree. Everyone wants a better outcome.

JAN

Jim - You have outlined what I think will happen this year too. But I am impressed with the thoroughness of your list. Hope your '09 is a very prosperous one!

Sonya Loose, Associate Broker, ABR, GRI (Red Carpet Keim Lake Forest, Gladwin, MI) Thank you. Some of it we will just have to wait and see how it all unfolds.

JAN

I think the 20% down will be part of the reason so many agents and brokerages will free fall. Nonetheless I like the list very thorough.

Justin Ukaoma : Kansas City Real Estate & Investing (Vizion KC) The interesting thing is that we departed from the way real estate was traditionally done in the past few years. No money down, DPAs etc... If you mentioned this back in the 90's...someone would laugh in your face, and call you a fool. Move into a home with no money down! As a nation we were. It was total greed that brought this ll down around us.

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