Housing Bubble Predictions For 2011
What’s your housing bubble prediction for the new year? Some from last summer. “The hardest part is filtering the country’s situation through the neighborhood particulars we’re dealing with. There is increased inventory but it’s in all the 3500+ niches because basically that’s all that’s been built here in the last 20 years. I wouldn’t be interested in anything that size anyway. I’ll gingerly venture forth with the prediction that the 3500+ niche will see a price collapse by next spring due to burgeoning inventory. But these sellers have been pretty stubborn and I haven’t seen as much price reduction as one might imagine by properties sitting up to a year. Many just take them off the market thinking they’ll try later when the market improves.”
One from California said. “Here in SoCal (Orange county) there is *way* too much shadow inventory. How long can the banks hang on? If just one bank (probably one of the smaller ones) breaks
rank and starts dumping, then all bets are off. It will be a tsunami of epic proportions.”
Another said. “For the rest of 2010, I see a continuation of the current trends: declines in home sales, stocks, and even oil, but no crash. The economy cannot improve until the old order (unsustainable government debt, artificially low interest rates, misallocation of resources to zombie corporations, worship at the idol of homeownership) is swept away. But the people who have a vested interest in the old order are so powerful, they can keep it going awhile longer.”
And one looks further, “The private sector economy has stopped getting worse in the aggregate, but will not get much better. Housing prices and wages will continue to drift down in real dollars, and will only stabilize or improve in nominal dollars if we get inflation, which will probably not occur until 2012. Aggregate employment gains will occur, but they will be small compared with the prior losses.”
“The next big crisis hits in mid-2011, and it will concern the public sector this time. With the economy stalled, the federal government tapped out, and state and local governments in crisis, there won’t be much way to avoid some serious pain. I don’t expect serious economic improvement on the private side until 2012, and that assumes we aren’t Japaning or Greecing. On the public side, that improvement may take decades — until the last boomer dies.”
A poster from Baltimore, “I predict a major riot/civil unrest in a city before the end of this year. You know the drill; police kill unarmed blk male, crowd forms, name calling, bottles thrown, shots fired, fires set, looting…Oh wait a minute? the president is black right?”
“Strike that; Obama will start a “real war” with Iran or N Korea that scares the ___ out of everybody and forces the masses to rally around the flag; those who challenge it will be neutralized by being called racists for not supporting the blk president. Pretty slick eh?”
One posted, “With respect to the second half of 2010, I don’t think most people have factored in the impact from the Gulf Oil disaster, or the real ongoing deterioration of the economy. The Gulf oil disaster will create a Gulf area economic disaster and plunge many businesses, families, banks, and states into insolvency. Many properties are now becoming less than worthless, where last year they were potentially income producing.”
“The government and MSM have already used such ludicrous Psy-Ops memes about “recovery” and “green shoots” as to have destroyed any credibility they once had, IMHO. California State workers facing minimum wage should tell you things are getting worse, not better. Second half 2010 = more pain, higher unemployment, more bankruptcies, more foreclosures, lower standard of living for most Americans. The collapse of the bubble continues.”
One from DC, “So hot here in D.C. ! Anyway, prices have not bottomed out, imho. Remember the run-up was crazy (100 - 200% in some areas). Prices have a loooong way to go before people can afford them with rational loans. Plus, the job market has stalled and shows no signs of improving…..Freddie, Fannie have not stabilized and frankly, need to be broken up. Plus, Pluto has just begun its transit through Capricorn (don’t laugh) which means the return to more practical lending has just begun.”
And this, “Conspiracy time: It’s possible we’ll discover that a lot of the “shadow inventory” was sold off in bulk, possibly to creditor nations (like China) in exchange for our Treasury debt. US Gov announces shift in immigration policy: Foreign nationals that own property in US are now eligible to apply for green card.”
One said, “A few less people in denial. A few more businesses closed. A few more houses with reduced prices. A few more natural disasters. A little less hope, a little less denial, a little more pain, a little more anger. Less belief in the China miracle.”
“What is happening in Germany is perhaps a fuse for the US. Those people know what big inflation is and they want it less than the rest of us, so they might be ahead of the curve. Asia won’t drag us into the next decade, they are the delayed extrapolation of what happens in the US and Europe. Austerity is a new word in politics. I expect we will hear it a lot towards November.”
A macro-economic look, “The bad news is the Gov is running out of money. The good news is the Gov is running out of money. These states such as Illinois and California have to stop spending when they can’t borrow anymore. The fact that their situation is so bad is really good as it shows their is not way out for them. If they do raise taxes, we will welcome their manufacturing and other employment to move to South Carolina. Same goes for Greece. They now have to pay for things and can’t afford them and so they have a crisis. The crisis is a good thing.”
“Housing will continue to crash and will go down another 50% in the states that had the worst of the bubble. It just makes the country a bit more livable for the young folks. A good thing.”
“Even the failure of the stimulus is a good thing. If they had never tried it, they would have said it would have worked. They tried it and it did nothing except break the bank. Done with that and so we can move on to fiscal responsibility. Another good thing. I am optimistic today. Let it all crash. Most of us know that the future is on the other side of the crash.”
And finally, “Uncle Sam seems to have decided to temporarily pursue a treatment of housing market bloodletting, in the wake of throwing in the towel on failing stabilization efforts. ‘Worse than expected’ 2nd-half price declines and sales are the likely result. Slow sales and lower prices are the result of a drop in demand coupled with stubborn sellers who don’t get the picture.”
“This scenario will persist in fits and starts until local home prices have declined to a level in line with local incomes and rents. Never forget: All real estate is local.”
