Well it's Monday morning and for some reason I wasn't able to sleep past 5:30 this morning. Normally you can't pry me out of bed until 7:00. Part of the problem is that as soon as my eyes opened my brain began telling me how messed up everything is right now in our national market, but more importantly in my own personal market.
That is one problem I will have to figure out on my own, but I read some really encouraging news this morning, which of course prompted me to do some free lance research. The first article was straight from Bloomberg.com about the Treasury market, see article. This started me thinking, didn't we go through a housing recession (be it minor compared to this last one), and didn't we see an explosion in growth after the last stimulus package in 2002? see article #2
One thing you learn over a decade in the mortgage industry is that once you think you've figured out the market it throws you a curve ball. But one thing you know for certain is that markets do not fall forever. What goes up will go down, and vice versa. The real question is how fast and how long will the next boom be ultimately. There are several factors to think about and plan for as well.
#1 With new changes in underwriting guidelines, how long before Banks relax their standards to keep up with growth? Or will the Banks put a governor on mortgage policy to slow down the rate of growth? Hopefully they just stick to one fundamental, do not allow mortgage payments to get so out of kilter with income!
#2 How long before inventories decrease to the point that an actual rebound is possible? There are still vast numbers of homes for sale, is the current market going to dampen the early spring rush to list a home?
#3 How long before we see real changes in the market? I won't claim I'm a fed expert, but most changes take months to filter through the economy. Will the real estate market rebound this month or next ? ...probably not! But I think this summer will be great for those markets that have taken the biggest beating. If I'm in California, Florida and Texas, it's time to start buying those bargain deals!
#4 Demographics are important! It's a great book, but The Roaring 2000s, by Harry Dent summarizes that the boomer generation will have a large impact on the Dow and other markets. Planning around their eventual retirement is critical for long term success. Will we go through the depression that Dent outlines in this book remains to be seen. But perhaps this recent real estate crash will keep things from getting as ugly as they could be in the 2010-2019 time period. I'm not sure we'll see the Dow hit 40,000 by 2012, but energy will remain a factor for the next decade and that maybe a bigger factor then when the boomer's retire.
Therefore in summary, there is good news on the horizon. The next few years should be good real estate and market years. The long term question is for how long. There are still a number of serious issues that the economy at large, and most of us should consider in our personal situations. Is debt going to continue to increase at record levels? Are we going to continue to lose our industrial base to the third world and China? Is there a chance that oil and energy forces inflation to rise quickly and a sudden reverse in fed policy is mandated once again?
But for me, any good news is good news at this stage.
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