Another crash in 2012? Any thoughts?

[masayako]

For Stock market, do you guys think there will be another crash in 2012 like the one we had in 2008?

The public is crazy about Dec 21, 12 Mayan Calendar etc… Any thoughts?

[Coronita]

Are you serious about superstition?

1) Obama cant afford one during election year.

2) Banks are going to need a way to make money. They are going to be underwriting like crazy and pushing those crazy ipos.

3) The “fad” in 2012 will be social media…All these social media will go nuts, as soon a facebook ipo’s.

Don’t believe me? Just follow the dotted line.
LinkedIn, Angie’s List, Groupon (the next WebVan imho), Zygna, Pandora, even here in SD: ActiveNetwork

4) Follow the hiring trends: hiring has picked up quite a bit in bay area.

I do have one prediction. We are going to see defense budgets shrink…And that’s going to end up spoiling the economic recovery in Southern California…The Northern CA economy will probably do better than us SoCal for the next few years.

[CA renter]

Though things on the ground appear to be picking up or at least not getting much worse, the debt issues around the world will not go away on their own.

Whether the downturn/recession/depression happens in one swift movement or if it happens as a slow, grinding, painful process over many years is anybody’s guess. Nobody knows, but either way, it will be painful. Personally, I hope we finally get some common sense leadership that will allow us to get through this more quickly.

[scaredyclassic]

Agree that election year is not the year for maelstrom. 2013 makes more sense… 13… Unlucky… 2013….get it?

[Huckleberry]

[quote=flu]I do have one prediction. We are going to see defense budgets shrink…And that’s going to end up spoiling the economic recovery in Southern California…The Northern CA economy will probably do better than us SoCal for the next few years.[/quote]

I have been giving this serious thought over the past six months and wondering what the impact will be on home prices in coastal SD (west of 5 in PB, OB, Solana Beach, Del Mar).

I do know when the defense budget was significantly scaled back here (in the early 90’s I think), it had a profoundly negative impact on house prices, even in the coastal neighborhoods.

Is the defense budget going to have a direct and negative impact on employment here and what percentage (in unemployment terms) would this look like?

Any predictions what’s going to happen to house valuations this time around? Down another 10%, 20% 30%, or nominal impact?

[sdrealtor]

Nominal. In the early 90’s this was still mostly a navy and tourist destination. Far more diverse economy now with telecom, biotech and tech industries strongly entrenched here

[an]

This is anecdotal, but my friend’s parents are selling their 4 houses in the bay and retiring in SD. I ask him why and he said because of the weather and there are a lot more things to do here if you’re an outdoor type of people. I don’t know how many of those people are out there, but I think the timing is ripe for these people to start retiring with their riches in SD. There must be more than a few who are approaching retirement in the bay who seeks more temperate weather and have the $ to move here.

[poorgradstudent]

Short answer: No, there will not be another crash like 2008 in 2012.

Longer answer: I don’t think many intelligent people, those who actually have or manage real amounts of assets, believe in any of that Mayan Calendar hocus-pocus.

Asset values simply aren’t as inflated as they were in 2008. It’s entirely plausible we’ll see a 5% correction in the stock market at some point in 2012, and the major indexes could end the year down or flat. But the odds of another major crash are quite slim. Obviously there’s always a chance of some major, unexpected event like the Japan Tsunamis or worse, but you can’t plan for those.

[Anonymous]

If Y2K didn’t spook the market, there’s no way the Mayan Calendar is going to spook the market.

And why bother selling if the world is going to end anyway?

[SD Realtor]

As I have posted before, I believe this will be a fairly phenomenal year with respect to the programs we will see implemented in order to stimulate the housing market. For better or worse it is a bit ironic that they will be implemented in an election year. We have already seen rumblings about them. Among them, and not limited to them I think they will include:

– A principal reduction program. This is not new and has already been in place. I believe we will see it ramp up.

– An investor incentive program for purchase of REO inventory for investment property. This could include a reduction in cap gains tax (cap gains from rental income for cash flowing properties?) as well as a shorter depreciation period (from the current one which is 27 years?)

– 100% financing offered by Fannie for new purchases (non recourse).

– Allowable Fannie refinancing for pretty much any and all properties at current market rates, (4.2%) REGARDLESS of what your property is worth and REGARDLESS of whether you are underwater or not. If you have a home worth 450k and you have a balance of 625k then you get a full 625k refi at current rates as long as you are current on your loan.

*****************************************************

I think these factors in conjunction with rock bottom rates will produce a fairly robust market overall with variances in cities nationally but mostly to the upside. These measures will also serve to keep inventory low and stimulate buyers who were on the fence as well as tenants. Additionally it will serve to slow down rent increases.

From the business side this will also continue the process of the public taking on more risk and reducing privatized loss of institutions and large investors holding assets that are underwater. The underwater homeowner refinances, the underwater assets are paid off at the full loan balance, and the taxpayers… I mean the gse takes on another turd.

What will be interesting is that I believe that no legislation will be needed for any of this. If there is any legislation needed and it becomes problematic then there will be executive directives and appointments that will push this through and do it fast.

How does this affect San Diego RE? I believe it will affect it in a positive way. I do think FLU has a very valid point about white collar employment and I do agree that sdr has a valid point about the diversity of the economy. I think that there will be fairly significant downsizing over the next decade at plenty of places… SAIC, HUGHES, TITAN and plenty of others. The commercial sector is strong though… not strong enough to soak all of the people up but strong.

The main point is the realization that it all hinges on housing. Pure and simple. The election doesn’t hinge on 1000 engineers losing jobs but does hinge of 3000 other people getting work in the construction sector, finance sector, and lower level sectors that thrive when housing heats up.

So to me…. any thoughts of housing going down for anything except high end homes are incorrect. The opportunity came and went quite awhile back. Next opportunity for that will not be until we see interest rates run and that is not gonna happen for awhile. That can has been and will continue to be kicked down a long long road.

[The-Shoveler]

Mostly what “sdr” and “SD R” said.

But I will add this caveat, I think the upside for Stocks is somewhat limited (maybe 10 -15%)

I say this because companies are operating at maximum efficiency with regards to personal.
(kind of like “coffin corner” if you are familiar with air plane terms)
If they try to grow (add employees) it will be very hard to do so without losing some initial EPS (efficiency). So the upside will be limited I think for a few quarters to a year even as the economy grows.

But while I think the upside is somewhat limited, there is a lot of potential market killers out there,
1) Europe
2) Slow down in China.
3) Iran.

So there is the possibility for a real crash (greater than 40% correction) IMO.
But they are going to try like heck not to let that occur…

Bottom line, limited upside with the real possibility of a market crash.
Me I am on the side lines for now.

[SD Realtor]

Agree with you bigtime on the stock market NOR…

[scaredyclassic]

Wait don’t puffs traditionally predict year end numbers?

[treehugger]

Iran has WMD and they are directed at Israel, we must invade and shut them down….there, problem solved (and shows how wrong Ron Paul and his isolationist ideas are) now no more “shrink the force”. We can go back to spending billions on defense and all the folks it employs and the contractors who use it as a cash cow.

I need a raise.

[paramount]

[quote=CA renter] I hope we finally get some common sense leadership that will allow us to get through this more quickly.[/quote]

Unfortunately were not off to a good start with Gov. Brown, who now needs to raise taxes for the favors (think big $$$$) he owed to various California public employee unions.

[Author]

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