Temperature Check for 2008 – Now how low do you think it will go?

[kewp]

Stan,

I don’t know why you hope I’m right. The lion’s share of our economic growth over the last decade was dependent on phony equity from the real estate bubble. By the time it collapses its going to decimate communities, particularly ones that are over-dependent on that sector.

Its not going to matter if RE drops 80% if unemployment is at 20%, interest rates skyrocket and credit slows to a trickle. There won’t be enough buyers or renters around for all that cheap housing. Look at whats happening in Detroit and Cleveland, houses are just going to sit empty and abandoned in all but the most primo of locales.

Something I think *might* happen if our economy is resilient enough to handle the RE bust is that the huge surplus of empty commercial and residential property lures big businesses to setup shop in the IE.

Another possibility is the weak dollar combined with a huge glut of downtown condos makes SD a popular destination for rich foreigners to buy vacation properties.

[stansd]

Kewp,

I don’t own a house. I would like to own one. I have somewhat of a natural hedge against an economic downturn if I can manage to keep my job. If my income stagnates or goes down, but the housing market tanks, my future expenses go down as well and I am made whole.

Stan

[stansd]

Kewp,

I don’t own a house. I would like to own one. I have somewhat of a natural hedge against an economic downturn if I can manage to keep my job. If my income stagnates or goes down, but the housing market tanks, my future expenses go down as well and I am made whole.

Stan

[stansd]

Kewp,

I don’t own a house. I would like to own one. I have somewhat of a natural hedge against an economic downturn if I can manage to keep my job. If my income stagnates or goes down, but the housing market tanks, my future expenses go down as well and I am made whole.

Stan

[stansd]

Kewp,

I don’t own a house. I would like to own one. I have somewhat of a natural hedge against an economic downturn if I can manage to keep my job. If my income stagnates or goes down, but the housing market tanks, my future expenses go down as well and I am made whole.

Stan

[stansd]

Kewp,

I don’t own a house. I would like to own one. I have somewhat of a natural hedge against an economic downturn if I can manage to keep my job. If my income stagnates or goes down, but the housing market tanks, my future expenses go down as well and I am made whole.

Stan

[hpi]

how low the price to be depends on several factors:

1. inflation
2. bailout plan
3. local job market
4. national economy
5. current rent price
6. inventory level

If US loses 10% of its GDP with modest-inflation and unemployment going up to 7-8% in the next 3 years, we will see another 20+% down in RE market (~6-8% drop per year). But if this is inevitable, the Feds will use inflation to counter the damage, so my guesses for what will happen (for the next 3 years) are:

Scenario 1: the economy go downs 10%, the inflation 10-15%, unemployment 6-7%, the house market in bad district down 15-20%, good district 8-10%, another 15-20% of 2004-2006 purchase goes to foreclosure (note already 10% of them sold at a lower price in 2007 as short sale or foreclosure)

Scenario 2: the economy flat, inflation 5%, the house market in bad area down 10-15%, for good district 5%, the another 10-15% foreclosure of 2004-2006 purchases

Scenario 3: in the bottom right now, the economy flat or modest increase, the inflation 5-10%, the house market in bad district down 10%, good district flat, 10% foreclosure of 2004-2006 purchase

Obviously scenario 1 is the worst, for some area, we will expect 20+% drop in price, but not for all the areas.

[hpi]

how low the price to be depends on several factors:

1. inflation
2. bailout plan
3. local job market
4. national economy
5. current rent price
6. inventory level

If US loses 10% of its GDP with modest-inflation and unemployment going up to 7-8% in the next 3 years, we will see another 20+% down in RE market (~6-8% drop per year). But if this is inevitable, the Feds will use inflation to counter the damage, so my guesses for what will happen (for the next 3 years) are:

Scenario 1: the economy go downs 10%, the inflation 10-15%, unemployment 6-7%, the house market in bad district down 15-20%, good district 8-10%, another 15-20% of 2004-2006 purchase goes to foreclosure (note already 10% of them sold at a lower price in 2007 as short sale or foreclosure)

Scenario 2: the economy flat, inflation 5%, the house market in bad area down 10-15%, for good district 5%, the another 10-15% foreclosure of 2004-2006 purchases

Scenario 3: in the bottom right now, the economy flat or modest increase, the inflation 5-10%, the house market in bad district down 10%, good district flat, 10% foreclosure of 2004-2006 purchase

Obviously scenario 1 is the worst, for some area, we will expect 20+% drop in price, but not for all the areas.

[hpi]

how low the price to be depends on several factors:

1. inflation
2. bailout plan
3. local job market
4. national economy
5. current rent price
6. inventory level

If US loses 10% of its GDP with modest-inflation and unemployment going up to 7-8% in the next 3 years, we will see another 20+% down in RE market (~6-8% drop per year). But if this is inevitable, the Feds will use inflation to counter the damage, so my guesses for what will happen (for the next 3 years) are:

Scenario 1: the economy go downs 10%, the inflation 10-15%, unemployment 6-7%, the house market in bad district down 15-20%, good district 8-10%, another 15-20% of 2004-2006 purchase goes to foreclosure (note already 10% of them sold at a lower price in 2007 as short sale or foreclosure)

Scenario 2: the economy flat, inflation 5%, the house market in bad area down 10-15%, for good district 5%, the another 10-15% foreclosure of 2004-2006 purchases

Scenario 3: in the bottom right now, the economy flat or modest increase, the inflation 5-10%, the house market in bad district down 10%, good district flat, 10% foreclosure of 2004-2006 purchase

Obviously scenario 1 is the worst, for some area, we will expect 20+% drop in price, but not for all the areas.

[hpi]

how low the price to be depends on several factors:

1. inflation
2. bailout plan
3. local job market
4. national economy
5. current rent price
6. inventory level

If US loses 10% of its GDP with modest-inflation and unemployment going up to 7-8% in the next 3 years, we will see another 20+% down in RE market (~6-8% drop per year). But if this is inevitable, the Feds will use inflation to counter the damage, so my guesses for what will happen (for the next 3 years) are:

Scenario 1: the economy go downs 10%, the inflation 10-15%, unemployment 6-7%, the house market in bad district down 15-20%, good district 8-10%, another 15-20% of 2004-2006 purchase goes to foreclosure (note already 10% of them sold at a lower price in 2007 as short sale or foreclosure)

Scenario 2: the economy flat, inflation 5%, the house market in bad area down 10-15%, for good district 5%, the another 10-15% foreclosure of 2004-2006 purchases

Scenario 3: in the bottom right now, the economy flat or modest increase, the inflation 5-10%, the house market in bad district down 10%, good district flat, 10% foreclosure of 2004-2006 purchase

Obviously scenario 1 is the worst, for some area, we will expect 20+% drop in price, but not for all the areas.

[hpi]

how low the price to be depends on several factors:

1. inflation
2. bailout plan
3. local job market
4. national economy
5. current rent price
6. inventory level

If US loses 10% of its GDP with modest-inflation and unemployment going up to 7-8% in the next 3 years, we will see another 20+% down in RE market (~6-8% drop per year). But if this is inevitable, the Feds will use inflation to counter the damage, so my guesses for what will happen (for the next 3 years) are:

Scenario 1: the economy go downs 10%, the inflation 10-15%, unemployment 6-7%, the house market in bad district down 15-20%, good district 8-10%, another 15-20% of 2004-2006 purchase goes to foreclosure (note already 10% of them sold at a lower price in 2007 as short sale or foreclosure)

Scenario 2: the economy flat, inflation 5%, the house market in bad area down 10-15%, for good district 5%, the another 10-15% foreclosure of 2004-2006 purchases

Scenario 3: in the bottom right now, the economy flat or modest increase, the inflation 5-10%, the house market in bad district down 10%, good district flat, 10% foreclosure of 2004-2006 purchase

Obviously scenario 1 is the worst, for some area, we will expect 20+% drop in price, but not for all the areas.

[JWM in SD]

JWM in SD

Sorry HPI, but your scenarios pretty much reveal how clueless you are about what is really going on.

[JWM in SD]

JWM in SD

Sorry HPI, but your scenarios pretty much reveal how clueless you are about what is really going on.

[JWM in SD]

JWM in SD

Sorry HPI, but your scenarios pretty much reveal how clueless you are about what is really going on.

[JWM in SD]

JWM in SD

Sorry HPI, but your scenarios pretty much reveal how clueless you are about what is really going on.

[Author]

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