PREDICTIONS FOR 2009 - DRIVE THE CAR ANOTHER YEAR AND STAY OUT OF THE MALL.

                              * * * *   DANGER!  HARD CORE REAL ESTATE TALK AHEAD  * * * *

PREDICTIONS FOR THE REAL ESTATE INDUSTRY IN 2008

                                             * * * * DANGER!  HARD CORE REAL ESTATE TALK AHEAD.  * ** *

REAL ESTATE IN 2009 WILL BE . . . . . ?           

It appears that we've seen fewer year end predictions for the coming year, 2009, it's understandable since:

• The economy is like a moving target.
• Many predictions are more like a wish list.
• The government is rearranging the deck chairs and a few passengers are going to go overboard.

Inspired by Jim Crawford who asks 10 questions about our predictions for 2008, this writing continues this series to have a comparative look-back for January 2010.  Of course, the below are my thoughts and although I haven't been able to shake the negative predictions from a year ago, I realize that the economy and our business must be given the attention that it will take to survive and profit by concentrating on what is working and focusing on where the real estate business is. 

1.  Mortgage Rates Lower or Higher?   Higher.  Eventually, inflation will have to cause a reduction in the money supply and cause rates to go up for everything.  With the mortgage mess and the concomitant losses by our foreign investors, sovereign wealth funds, etc., unless the government stops printing money, rates will have to go up.  Now that worldwide investors have learned what happened to their money, they will be loathe to invest in U.S instruments and particularly any type of mortgage backed security. 
 

2.  Credit Loosen or Tighten?  See #1.

3.  Numbers of Agents in Your Market Up or Down?  Down!!!    Let me say it again -Down!!!  The condition of the real estate market is no longer a secret although the NAR has tried to keep it so.  While prospective new agents don't understand the business of real estate, they do hear the news and since the condition of the real estate industry is now on YouTube, FaceBook and the family next door was foreclosed.  The growth of Buyers Agents will continue. 

4.  Real Estate Inventory Levels in Your Market Increase, or Decrease?  Increase.  I've seen them increase for the past 4 years and until the economy begins to grow again, what would cause foreclosures and short sales to decrease?  I do expect foreclosures and short sales to begin to be a larger percentage of the overall inventory in areas where they have just begin to grow.  Resetting 3-5 year ARMs and negative equity will cause more foreclosures. 

5.  Better Real Estate Market or Worse?  Worse.
Overall slowing of the economy, higher unemployment, higher taxes, more restrictive and expensive mortgage financing will worsen the real estate industry in 2009.  Slower auto sales will impact many segments of the economy causing middle class home buyers to stay where they are. 

6.  Buyer's Market or Seller's Market?   Buyer's Market.
By the classical definition, "more sellers than buyers", we have a buyer's market.  This will make pricing increasingly harder as comparative sales become harder to find.  Home owners with negative equity will not be able to sell NOTE:  There is some movement on the bankruptcy code, but that will help only a small percentage of home owners. 

7.  More Foreclosures or Less?  More.
As ARM mortgage instruments reset and payments increase beyond many home owners' ability to pay, natural relocations for employment and inability to sell for what is owed will send more homes to the foreclosure market. 

8.  Homes Sales Prices Flat, Rise, or Fall?  Fall.
Foreclosure sales, short sales, relocation sales and other market forces will force prices down.  As unemployment continues to grow, the median incomes will qualify fewer buyers. 

9.  Condo Sales Prices Flat, Rise, or Fall?  Free Fall!!!
As the price of town homes and single family detached homes fall, condominium homes will return to their historical position as the "last resort home" available for lower price buyers.  Defaults on condo fees will cause higher overall condo fees and disqualify many prospective condo purchasers.

10.  Commercial Real Estate Stay Strong or Start to Soften?  Continue to Soften.
General slow down in the overall economy will cause a retraction in commercial real estate investment.  Commercial real estate is sensitive to the world economy.  That's already happened and continues.  Shopping centers have increased vacancies, retailers are consolidating locations and closing shops.  About the only REITs that might show a profit are those that invest in medical and health facilities. 

What Will Be Will Be.

Courtesy Lenn Harley, Broker, Homefinders.com, 800-711-7988.