4 Economic Prediction’s for 2009
As the owner of a small, woman-owned business for the last 25 years, I have experienced a lot of market up’s and down’s. And, while the 2008 market is unique to itself, it does have similar traits with other declines in the real estate, financial and equity markets that we can draw from.
So, what does my experience tell me about predictions for equities and housing in 2009?
- Housing has further to fall in 2009. Housing has a bit further to fall as inventories remain at historical highs, and new inventory is being added daily. We are currently foreclosing on 10,0000 homes per month on average, and the end is no where in sight. The numbers of loan deliquencies and defaults are increasing, keeping downward pressure on home prices and upward pressure on unsold inventory.
- More Trouble Finding or Keeping A Job in 2009. The U.S. unemployment rate is growing along with the national debt. As business continues to slow, we will see more layoff’s and company closings in industries such as building and contruction, financial’s, auto’s, airlines, travel and retail.
- Credit Problems in 2009. Lenders will be very cautious about loaning money, even to their best customer’s, until they divest themselves of unperforming assets. The spread’s on mortgage rates will remain high in 2009, increasing the costs to borrow.
- Wall Street in 2009. The stock market looks forward, not backward. The recent sell off was not caused by horrific events which occurred in 2008 or earlier. The recent, unprecedented stock market decline, tells us that Wall Street expects and has priced in, that 2009 will be one of the worst ecomonic periods in U.S. history. If the street thinks the economy will improve in 2010, then 2009 should be an up year for equities. But, sit on cash for now, as it is really too early to tell.
For all the reasons above, I do not see a rosy 2009. But, that being said, I do see the opportunities that will present themselves. With regard to housing, I think we are nearing the bottom and price declines indicate that a lot of the risk is off the table. For those that are investing in real estate for the long term or for a place to live, I don’t see prices getting remarkably cheaper from here. Buyer’s planning to hold for five years would probably do well to take advantage of today’s interest rates. I see higher lending costs in the future, due to government borrowing, earning slowdown’s and regretable past mistakes.
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Tags: 2009, economic, housing, lending, predictions, Real Estate, stocks
January 1st, 2009 at 11:17 am
Hi ITN,
I enjoyed reading your article on the possible stock market collapse in 2009. Just thought you might find it interesting that I predicted this in 1996 and published it in South Africa. If you have a couple of minutes, please have a look at my page http://www.luckydays.tv/stock_markets.html in this regard, where you will see I first put it on the internet in 2001. The date is possibly August 14, 2009. I correctly predicted the big drop in October 2008 as well. Some food for thought!
Kind regards,
Adrian
January 1st, 2009 at 11:49 am
You see higher lending cost in the future? If you are referring to mortgage rates then you might want to re-evaluate your forecast for housing to rise. Higher interest rates puts downward pressure on house prices.
January 2nd, 2009 at 1:01 pm
Now the median or the average of houseprices is about the same as in 2004 and that only caused all these problems? We will ’suffer’ more then as it is still quite a bit to high. Credit problems? Visit Holland and you could see the american way of life of the last decades: don’t bother tomorrow as we’re living today to spend or else take a creditcard.