The Mortgage Meltdown Were hoping for a smooth Landing !! Here is CBS news 60 Minutes
HOUSING PREDICTIONS FROM 2010 AND BEYOND. Not all doom and gloom!! Every crisis breeds opportunity. And as a rule, the greater the crisis, the greater the opportunity. Since this is likely to be one of the greatest economic convulsions any of us has ever seen, it only follows that it will likely present us with many of the greatest profit opportunities in generations. I think 2009 is a great time to purchase property interest rates are low and there are many bargains everywhere you look. Unfortunately their are homeowners that are upside down on their mortgages but also have a chance to either work out a loan modification, refinance or a short-sale their home. I will have to agree with John Mulkey the housing guru, when he went out on a limb and publicize these housing predictions for 2010. While I occasionally discuss general trends and opinions about the market, I think it’s important for all of us to have as much information as possible in order to properly plan our futures. And while this is only my opinion, after all, it’s the only one I can offer; it’s based on SEVERAL decades of experience combined with careful observations of current trends and conditions. Here is what I see the future of housing:
I think the Fed will throw everything in it’s arsenal towards keeping interest rates low throughout 2010. To do otherwise would be to sabotage an economy that has been both erratic and unstable, and would prove fatal in an election year. Though the government will prefer to fight looming inflation, doing so would simply cause the economy to nosedive; and I doubt they’ll be willing to take that risk.
While it may appear that home prices have stabilized, my guess is, they have not. I predict we’ll continue to see overall prices remain at their current levels and, in some areas, to decline well into next year. Foreclosures and short-sales will keep pressure on home prices for another 2 – 4 years. I cannot foresee how we can possibly have a significant resurgence in prices for at least 5 years, with prices not returning to 2005/2006 levels for a decade or more.
Foreclosures and short-sales will make up as much as 40% of total sales for the next 30 – 36 months. And the percentage could possibly be greater, depending upon how eager banks will be to put their inventory on the market. Their preference will be to pace their release to keep prices from plummeting, but the sheer numbers may make that impossible for some banks. Even after the supply begins to dwindle, the effect upon home prices will continue for at least another year.
Unless the government passes a major and all-inclusive tax credit, sales must remain sluggish. I don’t expect another housing incentive. There is little public support for throwing more billions at the problem, knowing that whatever increase might be realized, the benefit would be limited, temporary, and far too expensive.
By spring of 2012 interest rates will rise sufficiently to negatively impact home sales. While this is not the path that politicians would prefer, approaching a presidential election, it will be necessary to keep us from unbridled inflation. This potential scenario supports the premise for a continuing housing slump, extending into the following year and beyond.
While many will view these predictions as meaningless negative claptrap, my intention is to share what I both see and believe to be true. If I am able to help one person make a more prudent choice, then my efforts will have been worthwhile. Take this with the proverbial “grain of salt,” but if it proves beneficial, we’ve both gained in the process.
And I would like to throw my 2 cents worth in! The big lenders (Chase/Wamu, Wells/Wachovia, Cwide/BofA, Saxon, Deutchebank) are deliberately and effectively manipulating the market by only releasing one single REO listing per month and letting 40 people bid on it, typically driving the price up by 15-25 percent over asking (and FMV.) They are able to get top dollar for one property at a time. How are they able to float their massive inventory? With bailout funds, of course!! The taxpayers are footing the bill for these lenders to hold onto their properties and then squeeze the buyers for every last cent. I for one am outraged that this abhorrent practice is allowed to continue. |