My 1 year prediction made back in December 2008....so far seems right on the money
As banks complied with the legislated wait period in California, new NOD activity slowed to a crawl in the fall of 2008. This means the pipeline of foreclosures will temporarily dry up sometime in early to mid-2009. Together with inventory down significantly, this should lead to stabilization in prices for at least a couple months. But slowed economic activity and job losses will take a toll on the local economy. Excess housing inventory and frustrated sellers, will keep downward pressure on rents. As a result, by the end of the year home prices will continue their downward march, eventually surpassing what I consider affordable/sustainable levels (based on historical price/rent ratios and income)........In terms of time lines…..next year home prices will level off then continue to fall to affordable levels, with years 2-4 seeing no increase, and perhaps single digit decreases, in prices as excess and distressed inventory are absorbed.
I'm curious to hear the predictions of other market watchers....what do you think things will look going forward? Continued stabilization or or plummeting prices?
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4 comments:
congrats, you were spot on.
I think we will continue to see prices converge towards the median. Low end strength and high end weakness with the median not changing much.
Yeah, good job.
I agree with Sacramentia regarding the low and high end.
What I didn't see last year was the level of direct government intervention into the market, e.g. $8k first time buyers credit, Fed purchasing $1.25 trillion of mortgage backed securities, Fed buying $200 billion in bonds and FHA loans becoming the new subprime.
Your data shows that this has had an effect on the market as interest rates have been held very low and are lower by over one (1) percent from last year at this time.
This is the state of the market and it doesn't look like that will change in the near term. High end coming down and low end stabilizing/strengthening.
I will still stick to my metrics which include rental parity, historical norms etc. Could be a long boring winter.
Thanks, it was an educated guess based on the data....but going forward, things seem much more muddled.
I do hope the government will start to withdraw supports. At some point the industry will have to stand on its own merit. (Although this is why I forsee price stagnation for some years...as the government withdraws from the marketplace)
Your prediction seems to back up your decision to buy a home. I still believe you bought way too early. Any idea on how much you've lost so far?
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