Housing Bubble Predictions For Labor Day, 2006
What’s your Labor Day prediction for the housing market? Make it local, regional, national or global. Here are some from the July, 1 2006 predictions thread:
“I predict that by the end of the year, the Seattle area will finally start showing signs of the bubble seen in the rest of the country. I’m using my landlord as a bellweather. He’s ARM’d to his teeth on both the place I’m renting and the place he lives in, with an unstable job.”
Another from Seattle, “Pretty much as planned. Inventory has increased about 15% since May 1st. The mania of 2005 has been replaced with the deacceleration of 2006. The fall will come after summer.”
From Florida, “I predict numerous Florida cities median prices will be negative yoy for Q2, several already are as of May. I think all of the following will show negative for Q2. Sarasota/Bradenton, West Palm Beach, Punta Gorda, Melbourne, Ft Lauderdale, Naples, Ft Myers, Ft Walton Beach, Ft Pierce.”
Some specifics, “EOY: Fed Funds Rate 6%. 1st National housing price YOY decrease : 9/06. State with biggest hit: Florida. 2Q Economic growth: 3.6%. 3Q Economic growth: 3.1%. 4Q Economic growth: 2.5%.”
From California. “High-level prediction: Stubborn Orange County sellers will not start making real price concessions until late 2006. 2007 will be a steady slide downward.”
One concurs, “I second your prediction, and add that OC will have a harder landing than average, as the mania has lasted longer there, leading bubble prices to more euphoric levels than places which began correcting sooner. Thus OC prices have farther to fall in order to realign with fundamentals than in places where housing market participants are less delusional.”
A view on the economy, “I think that a recession is baked in the cake. 1) Inverted yield curve. 2) MEWs are practically done. 3) RE prices are reversing. 4) Declining leading indicators.”
“There is no more fuel left to burn. IMHO we are headed for a deflationary debt collapse that will crash the economy. People will not borrow to buy more RE when prices are following. A deflationary psychology reinforces behaviour, just as an inflationary one does.”
Another said, “BB will fold like a cheap tent in the face of political pressure and will lower rates sometime in ‘07. It won’t matter. California and Florida will pass up Colorado for the highest foreclosure rates by 2009. Steep drops in housing prices will persist much longer than most bears thought possible. The government will respond by printing more money and still house prices will go down.”
From Maryland, “Accoridng to the MD Ass. of Realtors, you’d better buy a house now or be priced out forever, economic fundamentals be damned. They predict continued and indefinite price apprecation while talking about rising interest rates in combination with 1.9% wage growth. My take, OTOH, is this reeks of attempted CPR on our staggering market by trying to scare the sh*t our of people that they’ll be priced out forever.”
Another, “Mid year Prediction, 6-month forecast: 1. *Major* decline in the buyer pool by October, across the nation. 2. Continued growth of inventory at a steady pace over the rest of the year. 3. 1/4 point rate hikes at the next three fed meetings. 4. ‘For Sale’ prices will tend to remain at the peak. People will hold onto their suicide loans hoping for a turnaround until all resources are exhausted.”
A view of the markets, “Stock market says flat to slightly downward as traders can’t really figure out what the conflicting signals mean. I am calling for a ‘Black Friday’ this October. The Fed has at least 50 basis points left in it. Predict the September meeting is going to be a tough meeting of the Fed.”
“Housing markets will post nationwide year over year decreases in Q3 2006. At least one major high profile mortgage blow up remaining this year. The amount and severity of FB sob stories reported will slowly creep up. Inventory will continue to rise. I think it is possible for San Diego to break 30K homes for sale by the end of the year. If conditions are right we may see our first small market RE melt-down by the end of the year.”
Another on San Diego. “Regarding downtown San Diego only…. I predicted that in January that the calendar year change in average or mediam asking price would decrese 15-20%. After almost 6 months since, the figures are -9% and about -7% rspectively. I believe this trend will continue. Perhaps accelerate. June for all of San Diego County will likely see its first y-o-y decline in median and avg sold price, probably around -3%.”
On LA. “Los Angeles sellers will be ‘deer in the headlights’ by the end of this year; Phoenix will begin ‘Custer’s Last Stand’ in the same time period. Blood letting that media can’t ignore in 2007.”
A view on the media’s role, “I don’t see alot changing dramatically until the mass media starts to harp on the falling market. You need that lemming effect to really get things going. They love a good story and at some point the gains of siding with the NAR just won’t be enough for the joyous harping of a good story affecting millions.”
“Mid 2006 is definitely slower. I live in Nashua NH and you can now see a few homes(run down ranches usually) here and there under 200 grand. Last year I didn’t see one for sale for that range at all. There are a few articles about frustrated sellers but is still a small story.”
A look at the global impact. “This housing bubble will result in a national, if not international, depression. It’s everywhere and has permeate markets which would never have had any housing appreciation on their own. There’s no connection between housing and its respective regional job market in any manner. I think Bakersfield CA is one of the best cases for this point.”
“My advice; with enough of a savings to put in a 20% down payment after a 40+% correction, is to not bother. You’ll need that money to survive periods of joblessness in the decade to follow. Cash is king during a deflationary cycle.”
