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Posts Tagged ‘2009’

Expert Panel See’s Little Hope for 2009

Thursday, January 8, 2009 posted by Tommi Crow

Inman News, a leader in real estate news and publishing, is hosting its annual Real Estate Connect Conference in New York City this week. 

On Wednesday, a well respected panel of industry experts sounded off during a “Bulls vs Bears” discussion of the real estate market in 2009.   We were anxiously waiting to report a little good news from these real estate guru’s, but sadly there were no Bulls in attendance.

We thought our readers might be interested in the highlights, so we outlined some of the widely held opinions and sentiments expressed by the panel.

  • Home prices will remain unaffordable in many markets.   
  • Until home  prices reach a level that a couple on entry level salaries can afford to buy a starter home, the market will continue to correct.
  • With rising unemployment, it is unrealistic to expect that lower interest rates will be enough to stimulate home sales.
  • 12 months of unsold home inventory is extremely excessive.  Too many houses is another sign that a turnaround is no where in sight.
  • Housing will not have a V-shaped recovery, with prices rebounding quickly from a bottom.  The chart will be L-shaped, with a long period where prices stay flat.
  • Time is our best friend.  The ecomony will take years, not months to play out.  At a macroeconomic level, there is no point in talking about recovery yet.
  • All the rescue plans, tax credits and bailouts will have little effect in the face of rising job losses, along with falling wages and confidence.
  • If people understand the magnitude of the problem, and they plan to stay in their home for 5-10 years, then there is no real reason they shouldn’t buy now.
  • No one on the panel reported that they see a glimmer of light at the end of the tunnel. 

In the end, the “Bulls and Bears” session concluded with a sigh.  The experts concurred that the market will still be grappling with many of the same issues it is today, one year from now.  But, they are adapting to the new world order.  New York Times reporter, Andrew Ross Sorkin stated that instead of spending his time writing about mergers and acquisitions, he is still busy.  His new subject…Covering Bankruptcies.

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2009 Real Estate Prediction – Rents will Rise

Wednesday, November 12, 2008 posted by Tommi Crow

Prediction:  2009 will be a good year to be a landlord, as five factors collide to make rents rise in 2009.  

  1. 1.  An estimated 1.9 million homes will be foreclosed upon in 2009, which will tranform these former homeowners into tenants.
  2. New construction will grind to a halt, which means fewer rental properties will be available.
  3. As credit remains tight, potential buyer’s will be forced to renew their current leases after they are turned down for a mortgage.
  4. Consumer fear and an uncertain employment picture will keep would-be, credit worthy buyer’s on the sidelines, meaning less turnover in rental housing.
  5. Thousands of Americans who have been burned by recent homeownership will decide that ownership is not worth the risk and trouble.  They will sign a lease for the ease and flexibility, and happily return to rental living.

Investors and Landlords Take Note:  This convergence can be summed up in two words.   Higher Rents.  As the demand for rental units outstrips the supply, the upward pressure on rental rates will occur naturally.

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4 Economic Prediction’s for 2009

Tuesday, October 28, 2008 posted by Tommi Crow

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?

  1. 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.  
  2. 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.
  3. 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.
  4. 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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