January 1, 2008

Predictions For 2008

What are your housing bubble predictions for 2008? A selection from one year ago. “There has never been a YOY price decline. Don’t expect a national decline any time soon. History says prices don’t drop nationally. Part of this is because each component geographic area declines and increases at different times.”

“Sometimes no areas go down. Right now we’re seeing some go down, while others continue up. There have been many times when all have gone up together. But there has never been a year when all areas (aka the whole country) went down.”

“Prices fall by state and city. But they never fall nationally. I take reasonable sustenance from this broad swath of history.”

Another posted, “In areas where there is land, builders will buy vacant land for 50 cents on the dollar, materials at 50 cents on the dollar, and bid labor at 60 to 75 cents on the dollar (of the previous prevailing wage). They’ll sell at 60 to 70 cents on the dollar until they no longer can.”

“Do recall, building starts are *still* 50% above the natural absorption rate. The overhang is expanding. When Wells Fargo (or whatever bank) forecloses on the builder, they’ll do a cold hard calculation. In many cases, that calculation says finish the homes and sell for 30 to 50 cents on the dollar.”

One on the builders. “How about the home builders? I continue to think that TOL will be bankrupt by the end of 2007. And WCI will go before TOL.”

One from California, “There’s alot of people in their 50’s who went from dot.com/dot.bomb unemployed to living off equity. Many have used up the equity and need another draw as credit cards are reaching limits, but we know that the ATM is empty this time around.”

“I live in Monterey County, and there are many here and in about 7 surrounding counties, from Monterey County, Santa Cruz, San Benito, Santa Clara, San Mateo, San Francisco, Marin, Alameda, and further, who are living from equity. Those who went on unemployment from Silicon Valley and who lost a bundle from the NASDAQ popping at 5000 are hanging on with cat claws but there’s no more bubbles appearing and the end of the float looks near for most.”

One had specifics, “2007 prediction: Barring another 9-11 type event, or Katrina event, the bubble will continue to deflate slowly the 1st half of the year with the media cheerleaders saying the economy is great and now is a great time to buy.”

“After inventory sky rockets from a number of factors, new homes coming on the maket, re-sales coming on the market, etc., the 2nd half of the year will see some sellers start to panic.”

“The FED may lower rates to save the housing market causing the dollar (and then the stock market) to crash (or start to crash if you believe in the controlled/soft landing, which I do). The crash will not be a straight line down but may hit botttom by 2010 - 2012.”

And another, “My humble predictions. A recession in 2007 or 2008. Not for any specific reasons but just basic logic. It’s been 6 years or so since the last one and its rare to go for many years without one.”

“If we do have one it will be much more painful. Lowering rates alot is basically impossible due to massive debts at all levels of society. Central banks don’t want to change the status quo but their hands are on the trigger and their eyes on the forex/gold markets. People have no savings and real inflation is rather bad. It’s not like 2001 at all. I will say with a fair amount of certainy, that the world will be a different place by 2012.”

A little broader view, “1. 20% year-over-year national median price decline by the end of 2007. (Yeah, I’m predicting the market psychology snowballs). 2. 20% year-over-year California median price decline by the end of 2007.”

“3. A beginning of calls for changing the new bankruptcy laws to allow people less responsibility. But it won’t pass until 2008.”

“4. Jan 1 2008 will have cheaper Oil than Jan 1 2007 either due to Arab countries stocking up on money to finance the civil war in Iraq or due to Arab countries noticing the increasing worthlessness of their American investments and compensating.” An optimist,

“Here are some of my bold predictions: 1. RE bubble will bust very slowly over many years. People waiting for RE market to crash like stock market did, will be disappointed.”

“2. Lot of vulture fund money will come in to buy under-priced condos. Very few ‘normal’ everyday people will be able to get great deals on condos in desirable areas.”

“3. People who bough an overpriced house with ARM loans will cut back on their lifestyle before they go into foreclosure. I know of people getting rid of cars, etc to pay mortgage.”

“4. Most normal people (ie people who are not ‘professional’ investors) who bought multiple houses will lose all their houses and will end up with a large debt that they will have to pay off over time due to stricter brankrupcy laws. Most normal people who bought multiple properties have at least one property that they have good equity in…in the end, they will lose everything.”

“5. Some people with normal loans (who cant afford payments) will get toxic loans and postpone the inevitable.”

“6. More young adults will choose to live at home with family as they cant afford to buy a house. These yound adults will help family pay the mortgage (in cases where they are in trouble).”

“7. More foreigners will invest in real estate (Miami, NY, San Fran and other cosmopolitan areas) as the dollar weakens. This foreign investment will be limited to a few cities that foreigners typically like to visit/live….Miami being the primary city where this will happen.”

“8. Construction job layoff numbers will not be accurately reflected in stastics since so many illegals were working on construction sites.”

“Summary: This will be a long drawn out crash and there will not be a single indentifiable time period when the crash occurs. The crash will occur in the form of small drop in prices and stagnation for many years….no dramatic moments like stock market where stock drops 90% in a few months.”

One on the foreclosure market, “I think that reversion to mean prices will affect virtually all areas that do not have a specific countering event, such as construction of a new auto plant. Late in the bust, the areas that suffer most could be the small backwaters, as more desirable areas that had been most overpriced also drop the most and suddenly have renewed appeal. In general, I think that by 2009, we’ll see 1998 prices + one-third, to account for inflation.”

“The difference between this bust and the S&L one is the ‘equity that ain’t there’ because of all the subprime loans and the huge amount of MEW by so many homoaners. This could, I think, drag out the process of lenders shedding their REOs, as their percentage of loss-per-house could be significantly higher than last time around.”

And one asked, “Angry, torch-bearing mob of FB’s pays a visit to DL’s house?”

A local call, “Future of the Orange County, California, housing market: Every owner is praying for the spring rebound, inventories are up, and buyers are scarce. The median sales price peaked in June of 2006 at $640K; the median in December 2006 was $620K.”

“First, sellers will list their houses early this year to get a jump on the other sellers, so inventories will spike up quickly. Seeing this, buyers will become ever more reluctant. Also, since the median rose for the first 6 months of 2006, even if the median holds at $620K (which is unlikely), the YOY median will show steady declines. This will increase the desperation of sellers and make buyers even more reluctant. Panic ensues.”

“By June of 2007 due to a combination of the 2006 rise in the median sales price serving as a basis for calculation, and the spring 2007 panic selling, Orange County will be sporting a YOY median sales price decrease of at least 10% with 15% to 20% being a real possibility. The median home sales price may dip below $500K.”

“By fall of 2007 the panic will subside and volume will decline significantly. There will be a small dead-cat bounce, and David Lereah and all the usual suspects will call the bottom. They will be wrong. The flood of foreclosures will increase the supply of homes for sale to record levels. The close of 2007 will see median sales prices at or near the low of the year and poised to make another big drop in 2008.”

“The story of the year will be the largest YOY decline in home prices since the Great Depression, possibly the largest decline of all time.”

One saw a blame game, “Prediction: The finger pointing will pick up speed. Who could have allowed this slaughter to happen?”

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Comment by Ben Jones
2008-01-01 10:30:59

Interesting that no one predicted all the trolls would crawl off in shame!

Comment by Professor Bear
2008-01-01 10:33:13

Trolls are shameless by nature.

Comment by ex-nnvmtgbrkr
2008-01-01 14:50:12

So you’re saying that it wasn’t shame that made them “crawl off”, but something else….and I agree. I’m thinking the introduction of the Joshua tree and their sudden disappearance wasn’t just a coincidence. I love ya Tex, but I think we HBBers needed something a little more intimidating than a 20lb trout, frozen as it may be.

That being said, I do wish for some serious troll feasting in ‘08, so bring ‘em on.

Comment by Sammy Schadenfreude
2008-01-01 10:50:22

LV Landlord and others of her ilk, of the 2004-2005 era, unwittingly helped propel this blog to what it has become. They were the grains of sand that produce pearls. They’d come in spouting their NAR-induced delusions and nonsense, and immediately be dog-piled by the likes of…well, you know who you are! Close-in fights and scathing personal attacks make for some hilarious reading, and this board has always had that in spades.

I personally yearn for some as-yet unschooled Trolls to blunder into here, bursting with militant stupidity, and make the ever-fatal mistake of standing their ground instead of oozing off to the SDCIA or other, more friendly environs.

Comment by Professor Bear
2008-01-01 11:05:08

Vanquished trolls of yesteryear:

Antonio Villaraigosa

Comment by Professor Bear
2008-01-01 11:12:08


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Comment by DAVID
2008-01-01 11:53:38

Drentzel, he was bad, kept saying something about how home prices nationally have never gone down year over year.

Comment by crispy&cole
2008-01-01 11:12:46


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Comment by txchick57
2008-01-01 12:02:27

nah, HFA popped in a couple of times in the last few weeks to inform us that he was right (about what I have no idea).

Comment by crispy&cole
2008-01-01 12:12:32

“that he was right (about what I have no idea)”


Comment by exeter
2008-01-01 12:54:11

None of the trolls were quite as clueless as gekko.

Comment by Professor Bear
2008-01-01 13:25:22

“None of the trolls were quite as clueless as gekko.”

A great man you say? All I see is the actor creating his own ideal image.

- F. Nietzsche -

Comment by auger-inn
2008-01-01 17:31:17

HFA said the next FED move was UP (after they first held). The follow on comment was that he did this for a living, implying that any opinions to the contrary were irrelevant and not to be taken seriously. I remember the exchange because I found it particularly fascinating that someone would spout that type of comment.

Comment by SpacecoastFLRenter
2008-01-01 17:35:09

“God is dead” Nietzsche

Nietzsche is dead. God

Comment by Professor Bear
2008-01-01 17:43:02

‘“God is dead” Nietzsche

Nietzsche is dead. God’

I see debt people — (Patrick?)

Comment by exeter
2008-01-01 17:51:38

A great man you say? All I see is the actor creating his own ideal image.

- F. Nietzsche -

Serial spamming.

Comment by az_lender
2008-01-01 23:05:51

But HedgeFundAnalyst may have given up his troll ideas. The latest post I saw from him was on 12/31/07 and said:
“Housing became overvalued in 2000 and a mania in 2002 because even though economic fundamentals were deteriorating, prices went up.”
Let’s have a bit of tolerance for those who have belatedly joined our side of the argument.

Comment by passthebubbly
2008-01-02 08:33:26

I think Las Vegas Landlord still posts to the Craigslist housing boards under the handle LVLL.

Comment by Chip
2008-01-01 18:41:13


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Comment by sf jack
2008-01-01 23:16:45

aka “celebfan1000″

Or was it “celebfan2000″?

I can’t recall.

Comment by CA renter
2008-01-02 04:58:03

King Arthur

Comment by jbunniii
2008-01-02 12:49:09

Haven’t seen anything from the quasi-troll lainvestorgirl in a while.

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Comment by implosion
2008-01-01 11:08:35

Don’t know if anyone else posted it, but it looks like another “investor” going down at SDCIA. Not quite as entertaining as “Taco Bell Jeff”, however.


Comment by Sammy Schadenfreude
2008-01-01 11:43:12

I say we deploy TxChick for some trout-swingin’ tough love.

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Comment by txchick57
2008-01-01 12:01:26

I was banned there after beating up on some hispanic woman “investor” last year.

Comment by Sammy Schadenfreude
2008-01-01 12:56:18

Happily for us, you’re one of the true “anchor babes” on this site!

Comment by CA renter
2008-01-02 04:59:26

I believe they (at SDCIA) referred to tx as “one of the groupies from Ben’s mushroom farm.”

LOL! :)

Comment by zeropointzero
2008-01-01 17:57:07

Geez - that post reads a treatise on “how to get screwed” - not one but TWO houses, phoenix burbs, june 2005 entry, i/o and ARM financing, plus a heloc on one.

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Comment by rms
2008-01-01 18:44:35

Serial borrower?

Comment by NotInMontana
2008-01-01 18:25:17

Hahahah - the thread starts out with a RE Emergency and ends up with a discussion of the benefits of colonic “cleansing.” Someone should jump in and suggest the JT Treatment.

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Comment by Wickedheart
2008-01-01 19:12:40

The JT Treatment, now that’s some roughage!

Comment by Neil
2008-01-01 20:34:29

Wow! For those not wanting to click the link:

A) Do we try to SELL Both Houses in this market (if we even can) and take a $100,000 LOSS? (From Commissions, Lost Market Value, Lost Rents, Negative Cashflows, Maintenance, Utilities, Management Fees, Closing Costs, etc.)

B) Do we try to SELL One House and take half of a LOSS, although still huge?

C) Do we HOLD onto both houses LONG-TERM and do nothing, just continuing the way we’ve been going, with the $700 per month Negative Cashflows?

D) Do we HOLD Long-Term, Refinance and ADD More Capital to boost our equity and try and make the monthly payments break even?

E) Do we SELL in some sort of Seller Financing?

F) Is there NO HOPE for actually PROFITING in the long run, instead of LOSING Money?

G) Anything Else?

I am really at a loss as to what to do.

Thank You so much for any advice you can give us.

G) Become one with the Joshua Tree.

Lol… You can’t make up stuff that good.

Although the user name PeteF sounds like something Ben could come up with. ;)
Got popcorn?

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Comment by kthomas
2008-01-01 12:45:30

Ben, Happy New Year. Thanks again for all your hard-work and dedication to your blog.

Comment by marionsucks
2008-01-01 13:15:22

For those who want to see some Really Great Predictions that I made that already came true

it was posted JULY 8, 2006

Feel free to leave comments. I’d like to here what You think.

PS . You may have to type this link in. I’ve never posted one here.

Comment by RoundSparrow
2008-01-01 13:50:59

[ close bold, darnit ]

Comment by KirkH
2008-01-01 14:14:56


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Comment by JP
2008-01-01 16:06:55

off dammit!

Comment by GH
2008-01-01 15:09:22

Perhaps no more strong?

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Comment by Houston Observer
2008-01-01 18:50:16

Comment by Muggy
2008-01-01 19:35:04

Well, he didn’t peep on this board, but I miss doing battle with Shores9 (a Tampa Bay Realtor) on city data.

I like him enough… I’ll call him to be my realtor when it’s a good Time2Buy… in… 20……. 18?

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Comment by calex
2008-01-02 00:35:02

2008 is going to make the 70’s look like the 50’s.

Comment by hd74man
2008-01-01 10:33:44

Happy New Year’s to Ben and all the Fav’s & Reg’s.

Short time for the party hats and noisemakers, though…

$100 billion lost.

Comment by marionsucks
2008-01-01 13:31:04

If You want see the above link it’s http://gohere4money.blogspot.com
Sorry my post above is a little messed up. Typing error.Hope this corrects it.

Comment by marionsucks
2008-01-01 13:34:37


Comment by Professor Bear
2008-01-01 10:34:38

I predict both announced and unannounced mortgage and credit market bailout attempts from U.S. policymakers. And more arguments on this blog about what constitutes a bailout.

Comment by Justin
2008-01-01 13:24:22

Comment by Anonymous Coward
2008-01-01 17:37:51


Comment by CA renter
2008-01-02 05:03:24

I’m with you on the hand-wringing, GS.

It’s not over ’til it’s over — and there’s lots of opportunity for the govt/PTB to waste more taxpayer money and dig us ever deeper into debt.

Comment by BottomFisher
2008-01-01 10:46:58

Governator: I predict I vill be loved even more in 2008 by the peoples of Calyfornya than 2007

Comment by Sammy Schadenfreude
2008-01-01 10:53:12

Arnold would love to show anger and dismay over California’s tanking RE market and tax revenues, but he’s never had that kind of acting range.

Comment by aladinsane
2008-01-01 11:09:52

Ahnold Ziffel will be re-named, reflecting using the darkest color in matters financial…

His new name: BlackVader

Comment by scdave
2008-01-01 12:53:13

Noooooo…..B. Fisher…..Cali is projected for 18 bil deficit…If thats the projection then its likely to be far worse…..One of two options for the terminator….Raise taxes or cut services…Either way IMO he is toast politically….

Comment by vozworth
2008-01-01 14:10:35

multiple municipality bankruptcies…. runs on non-depository institutions continues…

Comment by mags57
2008-01-01 19:43:17

I agree w/ voz - I think that many of these S&L shops are seriouslu SOL.

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Comment by Jas Jain
2008-01-01 16:21:30

The tech bubble burst brought him to power and the housing bubble burst will remove him from power. In which year may be harder to predict.


Comment by edgewaterjohn
2008-01-01 10:53:43

Here’s one certainty for 2008: by Jan. 1, 2009 most everyone will be a heckuva lot sicker of politicians.

Aside from that train wreck, I’m curious to see in 1Q 08 if consumer spending has indeed begun a prolonged decline now that the end-of-the-year distractions are removed.

Comment by scdave
2008-01-01 12:57:45

“I’m curious to see in 1Q 08 if consumer spending”

Here, in San Jose, we have one of the higher end malls in northern Cali….Valley Fair/Santana Row…My duaghter works at a well known national ratailer part time while going to Graduate school full time….The numbers are way off…

Comment by dennis
2008-01-01 23:16:32

Here in So. Calif my son works at one of the ACE Hardware chains in Irvine and and according to him sales are way off for the last Qtr including Christmas sales.

Comment by FB wants a do over
2008-01-01 13:41:33

Starting Feb 2009 we will start transitioning from a borrow and spend to tax and spend.

Comment by Big Bob Slob
2008-01-01 16:49:46

For Chico California, I make the following predictions: Prices down 15%. I’ll also predict the sale amount for some specific properties that are for sale now: 1829 Devonshire and 1874 Bedford.
Here you can see a history for sales of identical model homes located in the same neighborhood. Included are the two sales that will take place in 2008.

1Q1 $138,000 1858 Bedford
1Q2 $145,000 2065 Rochester
1Q3 $151,000 1825 Devonshire
1Q4 $146,500 1837 Devonshire
2Q1 $148,000 1869 Devonshire
2Q2 $150,000 1865 Devonshire
2Q3 $167,000 1868 Devonshire
2Q4 No Sales
3Q1 No Sales
3Q2 $198,500 1829 Devonshire
3Q3 No Sales
3Q4 $239,000 1882 Bedford
4Q1 $270,000 1884 Devonshire
4Q2 No Sales
4Q3 $265,000 1869 Devonshire
4Q4 $279,000 1821 Devonshire
5Q1 No Sales
5Q2 $334,000 1880 Devonshire
5Q3 $323,000 1865 Devonshire
5Q4 No Sales
6Q1 No Sales
6Q2 $311,000 1837 Devonshire
6Q3 No Sales
6Q4 $280,000 1858 Bedford
7Q1 $245,000 1882 Bedford
7Q2 No Sales
7Q3 No Sales
7Q4 No Sales
*8Q1 $225,000 1829 Devonshire Dr
*8Q2 $220,000 1874 Bedford DR

Comment by rob
2008-01-01 10:54:13

i predict that 2008 is when the housing bubble outside the US starts to deflate. This includes Canada, Mexico, UK, Spain, and others. The rest of the world is still in “it’s different here” denial, but in the end, economic principals suggest that while everywhere is “different”, nowhere is really that different when it comes to over-valued and over-build housing markets.

This will cause the world-wide credit crunch to be more severe, as borrowers in other parts of the world start defaulting like their US cousins.

The winners? Net creditor nations, such as Saudi, China, Singapore… who will end up owning a big chunk of solid US companies and banks. Good luck trying to sue a US based (but foreign owned) company in the future, as the US government will be obliged to intervene (not to offend large foreign US creditors).

Comment by LongIslandLost
2008-01-01 11:02:37

I predict the opposite. US consumers stop borrowing money (and not by choice). Creditor nations find that their growth and economy are critically dependent on American consumers spending too much. Meanwhile the slowdown means that politicians start trashing foreigners for votes because they don’t want to mention the economy. When a big foreign owned bank fails, the politicians cheer about Dubains losing all that money. And, yes, the politicians will call the people from Dubai Dubains ;-).

Remember, too big to fail is really too big and too American to fail. Failed Japanese investments were left to twist in the wind last time.

Comment by in Colorado
2008-01-01 11:34:27

Which is why I think that eventually the funny money spigot will be reopened.

Comment by Jas Jain
2008-01-01 16:28:18

Growth of the mortgage debt was the biggest source of the funny money. Without growth in household debt there is no funny money out there. Showering money on banks in exchange for bad collateral is not going to mean much.


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Comment by Kime
2008-01-01 16:05:55

“The rest of the world is still in “it’s different here” denial, but in the end, economic principals suggest that while everywhere is “different”, nowhere is really that different when it comes to over-valued and over-build housing markets.”

But they will say what they are saying here in the Seattle area, “It’s just because of all the bad press from OTHER areas that’s causing people to be afraid to buy here, otherwise we would still be selling like mad, etc.”

Comment by Professor Bear
2008-01-01 10:56:06

“The story of the year will be the largest YOY decline in home prices since the Great Depression, possibly the largest decline of all time.”

Kudos to whomever can claim the credit for having made that prediction.

Comment by Professor Bear
2008-01-01 11:01:12

By contrast, this guy deserves the David Lereah booby prize:

“There has never been a YOY price decline. Don’t expect a national decline any time soon. History says prices don’t drop nationally. Part of this is because each component geographic area declines and increases at different times.”

Comment by Jas Jain
2008-01-01 16:32:38

How about?

Mr. Ratcliff, a UCLA economist: “The California home prices have never declined except when the economy was in a severe recession.”


Comment by Professor Bear
2008-01-01 17:17:04

Well, say, sir.

As I did stand my watch upon the hill,
I look’d toward Birnam, and anon, methought,
The wood began to move.

Liar and slave!

Let me endure your wrath, if’t be not so:
Within this three mile may you see it coming;
I say, a moving grove.

If thou speak’st false,
Upon the next tree shalt thou hang alive,
Till famine cling thee: if thy speech be sooth,
I care not if thou dost for me as much.
I pull in resolution, and begin
To doubt the equivocation of the fiend
That lies like truth: ‘Fear not, till Birnam wood
Do come to Dunsinane:’ and now a wood
Comes toward Dunsinane.

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Comment by txchick57
2008-01-01 18:27:25

I always loved that visual. In high school, I tried to draw it.

Comment by Professor Bear
2008-01-01 19:19:48

Shakespeare’s vision of the forest marching on MacBeth’s army is a beautiful metaphor for a strong correlation across falling financial markets in a globalized economy.

Comment by Arwen_U
2008-01-01 21:58:17

“Of course, it is likely enough, my friends,” he said slowly, “likely enough that we are going to our doom: the last march of the Ents. But if we stayed at home and did nothing, doom would find us anyway, sooner or later.

Comment by SanFranciscoBayAreaGal
2008-01-01 22:47:43

Lord of the Rings.

Read all the books in the late 1970s and read them again after the movies.

Comment by dennis
2008-01-01 23:23:11

Yeah! Well this time will be different. The reason he is at a university being an economist is he cannot find work outside

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Comment by Lostcontrol
2008-01-01 11:50:09

Nouriel Roubini’s Global EconoMonitor

Worst Housing Recession Ever: No End in Sight
Nouriel Roubini | Dec 28, 2007

Following the meltdown in new home sales - down a whopping 9% in November alone based on data published today – it is clear that this is not going to be the worst housing recession in the last 50 years as I predicted; it is rather going to be the worst housing recession since the Great Depression or, better, the worst housing recession ever in US history.

Comment by az_lender
2008-01-01 13:26:42

“ever in US history” sounds right. Although we may or may not experience something like the GD, the specific metric of housing prices nationally will probably fare worse than even in the GD. Note that in the GD, housing prices per se had already been coming down for some time, so were not absurdly high relative to other measures of economic health.

Comment by bill in Maryland
2008-01-01 10:58:03

Yes, since this is an election year, we will see a boatload of bailout proposals and more denial that any individual buyer ever lied about his income to get into paying mortgages.

We’ll see more months added to inventory in all the major markets as more people go into foreclosure.

The U.S. dollar will continue to weaken all year this year. It will be an attempt to bail out Wall Street as rates will either stay flat all year or drop 25 basis points and stay flat the rest of the year.

Oil will stay in the $90 to $105 range per barrel this year unless new instabilities develop in the islamo-fascist regions of the world and unless severe hurricanes do not disrupt supplies.

Hillary gets the nomination on the Democrat side. I’d have to make a wild guess for the Republican side but I’m for Ron Paul.

In essence, I predict more of the same that we saw in 2007.

Personally, I’m a frequent traveler and home maintenance is absolutely not what I want to do as a homeowner. No time at all to putter around Home Depot and be a repairman (I do shoddy DIY stuff anyway) and I prefer vacations and have to do business travel. A condo/loft with HOA is in my own future, but not in 2008. Prices will still be way too high in 2008.

Comment by az_lender
2008-01-01 13:28:40

Speaking with Dem friend of mine over the holiday, I told him HBBer’s were largely for RP, and he was very surprised to learn that our socioeconomic common denominator is: we are TENANTS

Comment by PeonInChief
2008-01-01 17:31:58

Tenant, yes. But I’m supporting Kucinich.

Comment by pismoclam
2008-01-01 20:01:32

How about having Kuch get the UFOs and aliens to bail us out?

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Comment by MacAttack
2008-01-01 21:41:04

You’re confusing that with Reagan’s Star Wars.

Comment by SanFranciscoBayAreaGal
2008-01-01 22:54:55

That was a good one MacAttack :lol:

Comment by Anonymous Coward
2008-01-01 18:32:33

It seems like there are a lot of owners here, too. And I’m not sure if HBBers are “largely” for Ron Paul. Percentage-wise, there is certainly more support for Ron Paul here than in the general population, but I think HBBers hold a wide variety of viewpoints. That’s one of the reasons I like reading the comments on this blog.

Comment by measton
2008-01-01 20:17:59


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Comment by reuven
2008-01-02 00:34:08

I’m not “largely” for Ron Paul, and I’m not a tennant! I own two properties (the house I live in, and some land in FL) 100% with no mortgages.

(And I resent the plans by Hillary and others to prop up house prices. I would welcome a 50% reduction in median house prices nationwide. It would just mean lower property taxes.)

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Comment by CA renter
2008-01-02 05:13:07

I think many HBBers are for Ron Paul because so many of us are willing to look at things from a different/contrarian perspective. More libertarians here — either in name or spirit.

And, dem or repub, most here are for a fiscally responsible government (I tend to lean left, but still think the govt overspends by at least 50%).

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Comment by FB wants a do over
2008-01-01 13:44:23

Gold to reach $1000 per once.

Comment by Neil
2008-01-01 20:39:05

agree… except the oil. I think demand from China/India and a weakening US dollar will have oil peaking at $120/bbl. Bouncing between $100 to $120 per bbl.

Got popcorn?

Comment by txchick57
2008-01-01 10:58:11

I predict that this is the year you start to read about the Clownifornia equity locusts who escaped to cheaper places with their funny money seeing prices come down back in the Motherland and wanting to go back. Alas, they learn the downside of “cheaper” cities - that they were cheap for a reason, and so yet more ill gotten gains from the bubble sprout wings and fly away to money heaven.

Comment by sm_landlord
2008-01-01 11:19:08

Agreed, and those equity locusts seeking to return will also learn the corollary lesson: prices fall faster in the less desirable areas than in the more desirable areas. Many of them will not be able to afford to return, or will end up living in Riverside/San Berdoo with 3 hour commutes to work.

Comment by are they crazy
2008-01-01 15:22:15

Just got offered another job in Riverside, but not worth the money to commute from desert - 1 hr 15 mins each way on a good day. By the time I factored in gas, car maintenance, increased auto insurance and my time, I’m better off working locally for less money. I didn’t know how much the commute was killing my body and soul until I stopped. While you’re doing something, you adapt and try to make the best of it so you don’t see the downside until you do something different.

Comment by CA renter
2008-01-02 05:36:42

Good for you, ATC.

Too many people don’t seem to understand that the hours spent on the road (not to mention the costs) are gone forever.

Another reason to rent…more flexibility WRT where one lives and works.

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Comment by Isabel
2008-01-02 07:53:43

I agree. I live 12 minutes door to door from where I work. I have been offered higher paying jobs elsewhere in the country but the amount of money is never enough to cover the commute, the aggravation, the state income taxes (which I don’t pay in Wyoming) the housing and various other associated factors that all add up to a lesser quality of life. I think if a lot more people could do math they would be moving around the country less for that illusory “raise”

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Comment by implosion
2008-01-01 11:25:06

Thereby adding to the inventory in their temporary locations.

Comment by in Colorado
2008-01-01 11:36:10

It would take a lot more than lower prices to get me to move back to California. Maybe if have of the people left it might be bearable.

Comment by in Colorado
2008-01-01 11:37:53

half the people

Comment by LILLL
2008-01-01 15:06:08

the bottom half or the top half?

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Comment by Blacque Jacques Shellacque
2008-01-01 17:41:16

The illegal half would be fine with me.

Comment by in Colorado
2008-01-01 17:46:06

The worse half.

Comment by Lostcontrol
2008-01-01 11:58:11

Please talk in plain english! I do not understand what you are saying in your coded language!

I am not joking. You are very knowledgeable, however I do not understand what you are attempting to say!

Comment by Lostcontrol
2008-01-01 12:03:52

I apologize Txchk57, this request was mis-directed.

Comment by crispy&cole
2008-01-01 11:11:26

I predict prices down nationally another 5-10%, inventory increases and a minor rescession in 2008, 2009 will be the worse…

Comment by crispy&cole
2008-01-01 11:14:24

*2009 will be when the pain begins…

(must check before I hit “add comment”)

Comment by Neil
2008-01-01 20:41:49

I agree. 2009 is the train wreck. 2008 will get scary, but the wheels stay on that year.

Although below… I like the idea of owning a popcorn factory. ;)

Thanks FB wants a do over. ;)

Got popcorn?

Comment by FB wants a do over
2008-01-01 13:59:48

Realtors will continue spouting the bottom was just reached - all throughout the year. Txchick57 will make a boatload via puts. Neil hits the lottery, buys a popcorn factory, and no longer has to ask - got popcorn?

Comment by oxide
2008-01-01 11:13:41

1. I predict that the real “affordable housing” is going to be re-partmented condos, or condos at fire sale prices (2-bed $150K or less in the major cities NY LA DC ect., and $90K or less in silly places like St. Paul). Once the appreciation incentive was stripped from the booming condos, demand evaporated. Condos were late to the party so they can hang on a little longer, but they too will crash. Right around next Halloween.

2. I predict I will NOT buy a house in 2008. I thought I would, but I’m just not as interested yet. And believe me, I have no interest in buying any of this overhang. It’s all cheaply built attached product. Instead, I will just buy when I feel like it, and break my lease.

3. I predict that at least one bailout bill will make it to the floor of either House of Congress to pander to voters, but will die there.

4. At least one mid-size bank, one major builder, and one major loan originator will give up on taking on new debt, and do the business version of jingle mail.

Comment by mags57
2008-01-01 19:52:09

I’d love to see the HBB’s guesses as to which major bank, builder, originator, etc is most likely to fail. IMO Citi is far worse than people realize and I wouldn’t be too surprised to see some spin-offs from them and from other companies that have basically become holding companies over the last 10 years.

Comment by passthebubbly
2008-01-02 08:39:27

For some time my darkhorse call has been Wachovia. Not necessarily go out of business, but at least get gobbled up in shame, ending the longtime rivalry with NCNB/ Nationsbank/ B of A.

Comment by dennis
2008-01-01 11:17:36

I predict the Stock Market below 12,000 by June. It will get ugly as panic sets in when the FEd is unable to control the pundits on wall street.

Comment by LookinInCali
2008-01-01 11:46:42

I like 11,600 by September as my prediction. More “wiggle room.”

Comment by txchick57
2008-01-01 11:59:08

I’d like to see that by April and a break under 10,000 in September/October. I’d probably buy that and hold it for more than three days.

Comment by bill in Maryland
2008-01-01 12:13:35

Ditto, I want stocks to go way down as soon as possible since I’m dollar cost averaging all the way through late December of 2008 into my IRA and 401k. Jeremy Siegel, “Stocks for the Long Haul” rocks!

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Comment by txchick57
2008-01-01 12:35:12

One day you’ll do the math and see the amount of $$$ that can be made back and forth in these swings.

Comment by bill in Maryland
2008-01-01 12:48:26

No. There is no way I can time the market. I’m too busy designing software to learn detailed investing. Never ever want to be a day trader! Philosophically, day trading does not add value to any economy. The early 90s was bad for stocks. I kept buying the S&P 500 in 1994. 2001 and 2002 were bad for stocks. I kept buying the S & P 500. Do you think my cost basis is anywhere near Vanguard’s Monday NAV of 136?

Comment by az_lender
2008-01-01 13:35:16

Timing the RE market doesn’t add any value either, and yet I bet everyone here feels we are “better” because we are simply on the right side of the RE trade at the moment. Collectively, we will have more power in the coming years than our FB brethren.

Comment by dude
2008-01-01 19:43:45

Philosophically, day trading does not add value to any economy.

I’m philosophically taking my family to Spain this spring using day trading gains.

Comment by shakes
2008-01-01 14:57:59

I posted this on Bits, Buckets
Txchick, It appears one should read or brush up on “Riding the Bear” I think we are ready for the next leg down.
Leg 1 subprime is contained.
Leg 2 subprime IS NOT contained but the economy is good.
Leg 3 and final leg, either inflation is BAD or the economy is not good. I think it will be either one that sets the market down for the count. I am guessing by the end of the first quarter we will have this answer.
What are your thoughts?
Inflation numbers or spending/jobs or both
It looks as though you are thinking the first quaters numbers will be the catalyst.
Inflation numbers or spending/jobs or both?

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Comment by txchick57
2008-01-01 15:22:15

I have that book on my desk.

Comment by are they crazy
2008-01-01 15:30:12

I guess I’m somewhat a simpleton. Although I enjoy learning about all the investing, longs, shorts, puts, etc., I have no interest in participating. I like cash still, I like cash in the mattress and a healthy bank balance. I’m debt free with very little expenses at this point - just day to day living expenses. This year to acquire boatloads of cash and then maybe next year I’ll play the market a bit, but only for the fun of it. I find as I get older, I like spending my money on experiences and what I call building rocking chair memories. It seems so many save for the later years and don’t enjoy the present much. I’ve seen to many old folks trying to travel when IMHO it’s too late to really experience it. It’s a bitch trying to travel with a walker, oxygen tank or wheelchair, aches & pains, and fading memory. You see these oldsters trying to get off the bus at tourist traps and not having the energy or enthusiasm to get off the beaten path.

Comment by wolfgirl
2008-01-01 15:48:19

My inlaws planned to travel when my FIL retired. Their health and fiances kept them from doing so. They were very bitter about it.

Comment by Michael Viking
2008-01-01 17:44:57

As my gramps said: “take a little bit of your retirement each day. These ARE the good ol’ days”.

Comment by Vermontergal
2008-01-01 20:58:45

My inlaws planned to travel when my FIL retired. Their health and fiances kept them from doing so. They were very bitter about it.

We’re not waiting until we retire. I saw too much of that already. Our retirement fund is the “too d?*m old and sick to have any fun or work” survival fund. We plan to spend money and travel along the way.

Comment by Professor Bear
2008-01-01 13:27:50

Don’t lose sight of the fact that the stock market always goes up, in the long run.

Comment by Jas Jain
2008-01-01 16:37:20

Only in America. More than half the major bourses in Europe did very badly during the last century.

Could what happened in Europe in 20th century happen to America in 21st?


Comment by Professor Bear
2008-01-01 17:18:56

Did their central banks target stock prices? (Not trying to suggest that our Fed would do so or anything…)

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Comment by Jas Jain
2008-01-01 17:33:11

Remember: In the long run the fundamentals do prevail and Fed intervanetion can only make matters worse.


Comment by Professor Bear
2008-01-01 17:48:04

“Fed intervention can only make matters worse.”

Two bits of evidence on this:

1) Too much fiber optic cable
2) Too many McMansions per McMillionaire

Comment by SiO2
2008-01-01 20:05:28

Actually, there’s not too much fiber optic cable now. The capacity laid in 2000 is finally getting close to utilization. Being available for almost free (post bankruptcy) helps the cost structure a lot!

Comment by sleepless_near_seattle
2008-01-02 03:23:53

Should I be buying some Corning?

Comment by vozworth
2008-01-01 14:45:48

FED will most likely begin the engagement of “stealth cuts” as the Term Auction Facility, and the SOMA’s begin to take on a life of their own, effectively allowing the FED to lower the Rate of Borrowing without actually lowering the FED funds rate. this will be met with resistance from China (as they have instructed the FED to not officially lower rates), but we must export the inflation by any means possible.

A dollar rally indicates that the Chinese are “allowing” the freshly printed Chinese currency to “increase” in value resulting in a “push and shove” of inflation….its gonna be a hot potato situation as to whose currency is the stonger as that currency will be the “hot inflation” number.

Political unrest will continue to erode the sentiment of the masses in the States as Russia gets cozy with Iran, culminating in Putins announcement that Iranians will recieve “Military support” from the imperialist United States, prompting a new round of “cold war politics” with a strong fear mongering tilt.

Ron Paul splits the Conservative Vote, and a Democrat wins the top spot. Unfortunately, for the second time in as many elections, failures in the voting system will create a backlash of even more unrest among the masses.

Fannie and Freddie both get bailed out by a new program for allowing overvalued real estate to get backed by Federal moneys.

Volatility on the stock market reaches fever pitch, Soveriegn Wealth Funds begin getting shorted by the very players who solicit such invitations in a move to establish just how strong the hands really are. Irobot will be the first at Merril to try this strategy through indirect holdings.

Consumers sleep through the pain with big Pharma getting fast track approval for a whole new set of drugs aimed at placating the masses.

only when the FED through stealth cuts force the Chinese to officialy revalue the Yuan, will the fireworks get started in the commodity arena, when oil hits 130 and gold over 2000, wheat, soy, and milk hyper-inflating force the american consumer to compete with Sovereign Wealth Funds feeding the masses will there manifest a move by the China to take Taiwan.

Its gonna be a checkmate kinda year. the unthinkable, the “its different” “it cant happen”…will…

Human nature has not changed, and wont. Greed and Fear.

Comment by Anonymous Coward
2008-01-01 18:51:00

“Consumers sleep through the pain with big Pharma getting fast track approval for a whole new set of drugs aimed at placating the masses.”

Some soma for the sheeple.

Comment by Pondering the Mess
2008-01-01 19:21:44

China won’t move against Taiwan until after the 2008 Olympics. 2008 Olympics to them is similar to the 1936 Olympics to Germany; a show of power that they have arrived on the World Stage. But once they do attack, their strike will be swift and final. Their strategy is simple enough - wait until we have so many problems on our own shores that we simply lack the will to stand against them. After Taiwan is under their control, they’ll start considering who is next for payback - maybe Japan, maybe Russia… we all know what happens when a nation like that builds up enough firepower along with a demand to be the next “Big Man” on the World Stage.

Comment by vozworth
2008-01-01 20:01:43

VINA DEL MAR, Chile (Reuters) - Xiao Qiong, 28, stares intently at a group of Chilean teenagers, smiles and says with conviction: “Ni hao!”

Hello in Manderine is code for “forget Taiwan, we want Chile for lunch, and copper for desert.” Beware roving bands of Chinese teaching children while throwing money at impoverished resource rich third world.

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Comment by MacAttack
2008-01-01 21:46:43

Absolutely. Look what Britain, France, and the US did.

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Comment by vardaman
2008-01-01 23:18:21

“Ron Paul splits the Conservative Vote, and a Democrat wins the top spot. ” He either will or won’t be nominated as the republican candidate. He’d have to be running in a third party to split the republican vote.

Comment by LILLL
2008-01-01 11:34:45

I predict that the MSM will still deny that we are in a recession.
Home prices in SoCal willfall off a cliff and nobody will ever again have to promise to feed the squirrels.
Credit will get crunchier.
HARM will win the lottery and host the biggest HBB party ever and we will all attend.
I will buy a repo SFH cheaper than a condo with 25% and live happily ever after. I will start lowballing early summer. I know it’s soon, guys, but I want to put down roots and I hate my landlady. I’ll be setting a new comp for the hood. She who makes the most offers, gets the best deal. I’ll buy for under 400k in the SFV. I shall share my journey with HBB.
Happy New Year All!

Comment by Professor Bear
2008-01-01 11:37:18

“HARM will win the lottery”

Good luck!!! I look forward to the party :-)

Comment by LILLL
2008-01-01 11:46:15

Errr…make that 25% down…

Comment by Professor Bear
2008-01-01 11:47:23

“I will start lowballing early summer. I know it’s soon, guys, but I want to put down roots and I hate my landlady.”

Plan for 2008: Teach my wife to come up with a reasonable estimate of a budget limit on how much house we can afford.

Plan for 2009: Start making serial lowball offers based on the budget limit developed this year.

Comment by scdave
2008-01-01 13:09:38

My plan for 2008;….Continue to reduce real estate holdings and increase cash vs. net worth vs. debt….Goal;..50% cash to debt….20% cash to net worth….Then I will attend Chick’s trading school in Tucson….

Comment by txchick57
2008-01-01 14:43:21

lol. You guys crack me up. Bring a Nutty Buddy.

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Comment by Shendi
2008-01-01 12:53:43

1. Some MSMs will lose market share due to people shunning the misleading, incomplete and shill type articles on the state of RE. Eventually some will die a slow death due to lack of RE ads

2. Increase in divorce rate

3. Increase in obesity and health related issues for the paycheck to paycheck families - more burden on the local municipalities.

shendi bhatta

Comment by cayo_ron
2008-01-01 18:07:33

Increase in bubble-related violence, i.e. multiple shootings/suicides. For real unfortunately. I think a handful have already happened. Not that they will come right out in the article and say that, but when you read between the lines.

Comment by Jas Jain
2008-01-01 16:43:08

“I predict that the MSM will still deny that we are in a recession.”

Even after the dating committee declares the beginning date of the recession?


Comment by Paul in Jax
2008-01-01 11:38:26

CROX will trade in the single digits and retailers will be practically giving the (god-awful) things away. MON and POT will burn a lot of speculators. XLF will be up for the year. Cotton will outperform the commodity index.

Comment by txchick57
2008-01-01 11:42:12

Gawdawful? I have 20 pairs of them.

Comment by Paul in Jax
2008-01-01 13:17:01

Wow, I’m flabbergasted. But do you plan additional purchases?

Comment by txchick57
2008-01-01 14:31:14

Yeah, when they wear out.

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Comment by shakes
2008-01-01 15:09:41

I have to admit I have a pair. I have stress fractures in my feet and wearing Crox make the feet happy. If the feet are happy then I am happy…. Well unless my wife isn’t happy ;)

Comment by rms
2008-01-01 19:13:11

“Well unless my wife isn’t happy”

Agreed. Wife unhappy = everyone’s unhappy.

Comment by neon kitty lips
2008-01-01 19:33:33

Buy wife Crocs

Comment by em3
2008-01-01 11:43:12

Rates of sales decline will taper off in the next few months into a more or less static number of sales nationwide; that constant won’t change much for a long time out. Prices, however, are going to continue to fall for many years to come (more than 10). Vulture fund money will try to catch knives by buying improved land this year; they’ll sell off both that and unimproved land in later years for losses. TOL will survive this year–it’s the most honest with itself and the press about the dismal state of the real estate economy. A few smaller banks go belly up in ‘08, but none of the major banks–some of which rather will see more receipt of multi-billion dollar infusions of cash from a trusting middle-east and east (which, however, will stop abruptly in late 2009–throwing the economy into terra incognita). The big story of 2008, however, is non-construction, non-manufacturing layoffs–in finance, banking, automotive, government, some academia.

Comment by Kime
2008-01-01 16:22:52

“Prices, however, are going to continue to fall for many years to come (more than 10).”

I think you are over estimating. I think a capitulation point will come within the next year or two where prices will be falling at a faster rate, then they will slow down to negative 2-3% per year for a couple of years. This will probably be the best time to buy from a financial point of view. The true bottom will come while median appreciation is still a little negative, just as the true downtrend started before it showed up in the median because of incentives, etc. Some areas will hit bottom a year or so later but most will be at bottom within 3 - 4 years from now, IMO.

Comment by Anon
2008-01-01 20:06:46

Who cares if there are lay-offs in banking and government. Those aren’t productive real jobs anyways.

Automotive might surprise you… pop quiz: were more low end cars sold in the roaring 20s or in the great depression?

Comment by barnaby33
2008-01-01 11:47:05

I predict lots more predictions! I predict we’re already in recession, especially counting for inflation. I predict we will continue to see inflation and deflation at the same time depending on what you are looking at. I predict that the worst of the housing declines will occur late in 08 as the banks are loaded to the gills and see the next wave building, at the same time that credit is getting harder to come by.

Mostly I predict Ben will still have a reason to run this blog in 08, happy new years!

Comment by BayAreaRog
2008-01-01 11:49:06

My predictions (probably all wrong):

Inventory swells in late January (the Superbowl effect). Normal sellers who’d been waiting out the holiday season + a few FBs. Buyers drink the RE agent Kool-Aid and start trying to buy again, but can’t get loans. Expect lots of aborted escrows in March. Good buyers with money can still buy, so sales volume goes up temporarily and median price plateaus or inches up.

Spring brings a huge wave of FB listings due to ARM resets. Early ‘08 listings still haven’t sold. By May, inventory spikes to “unprecedented levels.” Leslie Appleton-Young calls this “the best buyer’s market in history.”

Through September, sellers and REO-rich banks still act as if it’s early 2006 and don’t budge much on prices. True lowball offers (20% or more off asking price) still get rejected, by and large. Would-be buyers finally realize foreclosures and REOs aren’t better deals than regular listings and lose interest. Inventory keeps growing.

By fall, dismal sales and famine finally cause agents and sellers to get real and drop asking prices (or accept low offers). “Good deals” become more widely available. Beginning of a decent time to buy for buyers with hoards of cash and a 10-year hold outlook.

Holiday season: Rent-a-Santa rates drop markedly due to influx of former RE agents into the profession. Seasonal shrinkage of inventory and sub-zero consumer interest leads to lowest sales volume since Nov 2007.

Nationwide, prices drop back to 2004 levels.

Comment by DAVID
2008-01-01 11:56:50

Were right on track for a 50% decline by 2009.

Comment by Professor Bear
2008-01-01 14:06:56

By then, the GSEs can finally claim success in achieving their mission of providing affordable housing.

Comment by Jas Jain
2008-01-01 16:50:53

And GSEs will be bankrupt in the process of paving the way for “affordable housing.”


Comment by oxide
2008-01-01 12:23:05

Ron Paul will raise a lot of campaign cash, but it will be too late to make any headway in these early primaries, especially because the media hates him. (For example, I don’t even know it he’s in Iowa.) He’ll have to change his affiliation to Indepedent (or some other third party) to stay in the race. He’ll make a splash in the debates, but go the way of Ross Perot. The anti-govs will vote for Paul, the social-issue voters will vote for Huckabee/Romney, and the plurality will vote for Hillary.

Comment by spike66
2008-01-01 13:07:58

I think the tanking economy and the sinking middle class will make the economy issue #1. I expect Ron Paul to do better than the media pundits expect, and that Bloomberg will enter the race in April after the failure of spring selling market for housing. Defaults on credit card securitizations will continue to spike, auto sales continue to tank, tax revenues to tank, and the first wave of baby boomers begin to retire and demand those public pensions and health benefits. In 2008, the battle cry will be “Where is the money?”.

Comment by Mary Lee
2008-01-01 20:30:16

I’m praying for Bloomberg to decide he can win and step up to the plate. I’ll take his deficits before any of the purported front runners

Comment by Doug in Boone, NC
2008-01-01 14:29:35

Ron Paul’s brother Bill and I go to the same gym. We rarely see each other, because we usually go at different times. The other day, though, we were there at the same time. I asked Bill if his brother was going to make a third-party run, if he didn’t get the GOP nomination. Bill told me that the way things look now, probably not. I begged Bill (as best I could, considering I was on my back doing bench presses) to try to get his brother to change his mind. Hopefully, he’ll have some success.

Comment by Muggy
2008-01-01 12:31:19

I said it a few days ago, but we’ve only seen glimpses of the verbal fireworks that UCF’s Sean Snaith is fixin’ to set off in 2008.

Souffles, runways, raptures… 2008 will be incredibly entertaining. I can’t freakin’ wait!

Comment by Groundhogday
2008-01-01 12:36:31

Another posted, “In areas where there is land, builders will buy vacant land for 50 cents on the dollar, materials at 50 cents on the dollar, and bid labor at 60 to 75 cents on the dollar (of the previous prevailing wage). They’ll sell at 60 to 70 cents on the dollar until they no longer can.”

Wow, this poster was right on the money. But this just started in late 2007. I predict we’ll see even more of this, builders drastically undercutting the existing home market through 2008 and competing with bank foreclosures.

Second prediction: It will be almost impossible for anyone to get a home loan by the end of 2008. Even Fannie and Freddie, with their implicit federal guarantee will struggle to securitize mortgages. FHA might be the only game in town, but not a game that will support even slightly bubbly prices due to tight lending guidelines.

Comment by JP
2008-01-01 16:18:25

It will be almost impossible for anyone to get a home loan by the end of 2008.

My variation on this: Anyone who wants a loan will not qualify. Those who qualify will continue renting, anticipating a continued drop in prices.

I’d like to start a pool on when foreclosures peak. (I firmly believe that we have at least 18 months of price declines after the foreclosures peak.)

I got dibs on Jan 2009 for foreclosure peaking.

Comment by pismoclam
2008-01-01 20:11:21

For those of you who ‘remember’ the 90-96 crash (in housing). In 1995 there were a max of NODs and in 1996 there were the max Trustee Deeds.

Comment by SDGreg
2008-01-01 12:38:20

One of the stories for 2008 and especially 2009 will be one of increasing fiscal problems for state and local governments. Those with pension plans that aren’t properly funded and those that offer generous health benefits will experience even greater difficulty.

It will be evident by the end of 2008 that the current fiscal problems in California, which will eventually seem minor in comparison, will be increasingly severe in the two years that follow.

The administration that takes office in January 2009 will inherit the greatest set of financial challenges this country has faced since the Great Depression and possibly the greatest in the history of this country. That most of the current set of presidential candidates don’t seem to have a clue about what they may inherit is more than a little troubling.

Comment by scdave
2008-01-01 13:14:43

I agree….

Comment by Rich
2008-01-01 12:41:02

Is the consumer really dead? Once all these FB stop making their mort payments they might have some disposable income to do Bushies bidding and go shopping.

I think this may be a significant factor. Consumer spending doesn’t have to drop by much to put the hurt on countries exporting cheap crap here. The Chinese margins are already ridiculously low. Small declines in US consumer spending (due to inability/no desire to borrow) will have major impacts on other world economies. A small reduction in US demand can have a major effect on wold energy prices. Long term oil is gonna kill us and will be replaced, small short term reductions in US demand might drop the price of oil considerably. I think the other world currencies will follow the $USD down in the coming worldwide currency destruction through bad debt.

I don’t see the Fed stepping up to the plate with higher rates to stop the declining dollar. Eventually the dollars collapse will bolster American exports. In the short term I think exploding world food prices will benefit CA and other agricultural areas that actually produce salable goods.

Stock Markets? Will depend on how much stock the Fed buys? I’ll leave that to you black helicopter guys.

Inflation! You betcha! I really think we have seen the last of $10 toaster ovens. The days of the Chinese selling us poison toys for fraudulent securities (Krugman) is unsustainable and will change.

I know these are longer term than 2008 and maybe off topic, but I would like your take.

For 2008, more of the same statistic manipulation by the gov. and MSM telling the sheeple everything is fine while the housing collapse intensifies, major builder or two belly up, major bank or two belly up and the prices of the volatile stuff excluded from inflation index (food, healthcare, etc.) continue to soar.

The debt as money system we have is bound by physical laws to suffer monetary destruction through bad debt. It is the only way the system can right itself, without burning investors through bad debt default the principle loans can never be paid back with the requisite interest.

Please see this


long but interesting, sry don’t know how to do the shortening of the address thing.

Comment by vozworth
2008-01-01 14:08:59

consumers will spend becasue they must, commodity rally continues until such time as the unwashed masses are starved into a mob of pitchfork wielding revolutionaries.

Comment by Thomas
2008-01-01 15:59:37

I dunno…a good number of Americans I see could go for several months without eating just on stored fat reserves alone.

Comment by dimedropped (Orlando)
2008-01-01 12:41:18

Two appraisals this week, both purchased in summer 2007. 1st purchased at $877,000 and value this week $625,000. 2nd purchased at $200,000 and now $160,000. Unfortunately, we are not yet in freefall which we will be this year.

Out of 30 appraisals this past month 60% were short sales.

Fraud is rampant still. Found it in 3 condo projects this month. Yes, I called the lender about it and they called me immediately from their national headquarters. They apparently have a lot of exposure beyond the loans I was working on.

Money is tight as hell even for good borrowers.

People stopped fighting us on values here this past month or so as it is headlines every day.

Lenders are demanding that appraisers check the “value declining” aspect of appraisals. Now you get blacklisted for not saying this and a year or so ago they would blacklist you for checking it……and so it goes……I have no predictions for 2008 but I also am a viet nam vet and I have the same feeling I had in January 1968 just before the TET offensive. We won that battle but paid a terrible price for the “so called” victory. It is wayyyyy too quiet.

Comment by implosion
2008-01-01 13:27:50

dime, always appreciative of your info.

Any places in FL that you, or other FL posters, think might be worth looking at down the road?

Comment by KayLaw
2008-01-01 15:21:38

It’s just too soon. I live in the Tampa Bay area and prices are way too high. My father lives far too the south and it’s even worse there. It’s just not the time yet.

Comment by bob
2008-01-01 13:29:00

i have this troubling feeling as well. They are letting the bad news drip out and immediately have folks say that it is contained. It seems like there is a chance that this could be very bad for the economy and could happen very quickly.

Comment by shakes
2008-01-01 15:33:56

I think it is an effort to let out a little information then distract the public i mean consumer with some other story, then let a little more out then distract. By doing this the sheeple can’t piece the information together and they extend the unwinding of this credit bubble. If they can keep the public (there I go again) I mean consumer unaware and still spending to the best of their ability then this is the only hope to prevent a major recession!! We are the ones who need to alert the others what is getting ready to happen so that we speed up this process and allow panic to clean out the excesses. Once everyone is positioned appropriately l say we all Scream WOLF together and watch the stampede. Everyone get positioned by Feb 29th and we can try to create the “2008 leap year stock market massacre!!” ;)

Comment by Kim
2008-01-01 13:32:20

Great post, Dimedropped. Specifics like you’ve given here are the treasures of this blog.

Comment by Paul in Jax
2008-01-01 13:46:50

Great post. I think the most significant thing you said was

“People stopped fighting us on values here this past month or so”

Sellers and seller-agents are finally exhausted trying to verbally or otherwise hold up this market. You can’t hold back the Mississippi with sandbags when it’s in flood. They’re beaten. That’s big.

Comment by Groundhogday
2008-01-01 16:07:25

“Money is tight as hell even for good borrowers.”

In our neck of the woods (Pullman, WA), there are still a few fools buying a new home before selling the old… now caught with two mortgages indefinitely. There are still a few “investors”, builders and developers throwing up new homes.

If money is so tight, how are these folks getting loans? Personally, I still think we are still quite a bit short of traditional lending standards.

Comment by LILLL
2008-01-01 17:17:22

Uhh yeah. In Studio City Ca they are STILL tearing down quaint old 40s bungalows one at a time to build McMansions. Apparently, cheap $ is still to be had. Three more torn down in my neighborhood in the past week. Sheesh! I guess they feel there is still money to be made….or maybe they are trying to keep their crews busy until the supposed spring bounce????? They are building at record speed. Changing the landscape of an unpretentious neighborhood(used to be)

Comment by CA renter
2008-01-02 05:56:43

That is one of the saddest parts of this bubble, IMO.

My DH and I are both native SFV’ers and to watch those nice, simple neighborhoods get converted to ugly “see me” McMansion farms is a travesty.

Can’t wait until they tear down those ugly boxes and replace with nice, small, custom-built traditional homes. :)

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Comment by in Colorado
2008-01-01 17:55:53

Money is tight as hell even for good borrowers.

FWIW, a relative of mine had no problem whatsoever getting a mortgage even though he hasn’t sold his old house and took a heloc out on it for the down payment on the new house.

Comment by nova
2008-01-01 19:32:12

Yeah, I agree. Much to quiet and there is a subliminal edge to people. I really expect the crap to hit the fan and I don’t think it will be economic.

Comment by rms
2008-01-01 19:38:26

“It is wayyyyy too quiet.”

Agreed. The silence is deafening!

Comment by nova
2008-01-01 19:45:35

Damn. Man, all my alarms are at low level alert. Been that way for at least a week. Holidays cause static but, yeah, definetly time… I really hate this feeling… Time to get squared away

Comment by jckirlan
2008-01-01 20:45:16

Dimedropped, thanks for your service in both wars.

Comment by need 2 leave ca
2008-01-01 12:49:50

Happy New Years to all HBB bloggers. May the new year be good to all of us. Baby alert. I had written we got a Christmas born baby. Update - baby and mom doing well. Happy, healthy, and all good for one week old Ashley Noelle.

Comment by JP
2008-01-01 17:16:40

Congratulations! and may you achieve sleep in the new year.

Comment by oc-ed
2008-01-02 03:14:39

Congrats! You have now entered the twilight zone of parenthood where you will become intimately familiar with each and every hour of the day.

Sleep when the baby sleeps.

Comment by CA renter
2008-01-02 05:58:35

Congratulations, need 2 leave!!! :) :)

Didn’t know you guys were expecting. What a beautiful Christmas gift. :)

Comment by em3
2008-01-01 12:50:11

Ron Paul places 3rd in Iowa. Clinton places 2nd in Iowa. Bloomberg runs a third party candidacy, taking an infinitesimal percentage of votes from everybody, left and right, with no discernible bearing on the outcome for everybody in November. Clinton wins in November. She’ll try to spend her way out of massive economic problems, which will exacerbate them.

Comment by scdave
2008-01-01 13:18:35

“She’ll try to spend her way out of massive economic problems”

You really mean “Tax” and spend don’t you ??

Comment by em3
2008-01-01 14:02:52

You can’t have corporate government without revenue from consumers (constituents?).

Comment by Wickedheart
2008-01-01 19:27:02

You really mean “Tax” and spend don’t you??

and “borrow” and spend is sooo much better, right?

Comment by measton
2008-01-01 20:53:07

My prediction

market rises briefly after election then tanks a month or two later. Big Big drop.

Bloomberg will run only if Huckabee or Edwards win. If both win and he runs I predict he will win.
Oil prices will go through the roof unless there is a total collapse of the world economy. We will discover that no body (Saudi’s Exxon others) have as much energy as they had promised.

My hope is that who ever wins initiates a New Deal type program to prevent riots. Only this one will be done exclusively to reduce our energy use. Those unemployed by the collapse of housing will be put to work insulating homes and installing solar and geothermal energy systems that will receive huge tax breaks.

An economist will calculate that burning abandoned McMansions, and unnecessary crap from China will provide 50years of electricity and a McMansion recycling program will commense. Thus solving two of our most pressing problems, an oversupply of housing and our addiction to oil produced by countries that hate us.

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Comment by hd74man
2008-01-01 13:16:35

RE: Lenders are demanding that appraisers check the “value declining” aspect of appraisals. Now you get blacklisted for not saying this and a year or so ago they would blacklist you for checking it……and so it goes

I have no idea how you cope with this continual “shifting sands” appraisal BS.

When I first got into the biz, I remember reading that the life expectancy of a real estate appraiser was lower than av. due to the tremendous stress involved in the profession.

You can probably knock off an additional 5 years for dealing with the disasters from this debacle.

2008-01-01 16:37:09

Just so you guys know, when you check that box it means an instant LTV reduction of 5-10% from the lender. I lend nationally but, hold my breath everytime I open an appraisal from the bubblies. The values never suprise me but, dont like having to explain to the FB’s that their house is way underwater. Course the standard response from the borrower is that they got jobbed by the appraiser and will say the stupidest things like, “He was in and out of here in 5 minutes. He didn’t even notice the upgraded hardware on my kitchen cabinets that i installed.”

Comment by dimedropped (Orlando)
2008-01-02 07:18:41

Truthfully, it has been a lot of stress and I have not smiled much for the last few years. As a friend of mine says “it is hard to smile when you know this much”.

Comment by aladinsane
2008-01-01 13:17:54

Liquidity (or lack of)

Will be the key to 2008.

If you can’t sell your home or condo @ any price, then comps mean nothing.

TILT, game over.

Comment by Curt
2008-01-01 13:38:45

I predict 2008 will be exactly like 2007…….only much worse.

Comment by az_lender
2008-01-01 13:54:58

If az_lender’s clients begin to default, you will know things have gotten seriously worse. I will say this much: my would-be borrowers are now admitting that they are lowballing the sellers, instead of just chanting “It’s different here.”

Comment by az_lender
2008-01-01 13:40:19

Here’s a pleasant prediction: the rate of face-to-face meetings among HBBer’s will increase. Neil will probably have some more parties, but even if he doesn’t, others will. I know some of the NY folks have gotten together, although I myself have met only NYCB. Look forward to seeing additional HBB folks whenever.

Comment by NYCityBoy
2008-01-01 15:40:51

You are so lucky.

Comment by CA renter
2008-01-02 06:02:26

I think we need to have a Vegas HBB get-together.

We’re all gamblers after all. ;)

Comment by passthebubbly
2008-01-02 08:46:56

Yeah, that would be cool.

I’ll throw this out: Over the next few weekends I’ll be in Seattle, then Reno/Tahoe, then the South Bay, then San Diego. Plenty of us bubbletistas in those places surrounded by overpriced houses, no?

Comment by flatffplan
2008-01-01 13:45:28

super bowl
prices up and Redskins in
how’s that ?
what ever happened to prices zooming up after the super bowl

Comment by WT Economist
2008-01-01 13:49:39

I expect 2008 will be a repeat of 2007, only more so.

It will be the year of the most significant nominal housing price declines, and the start of a recession. Depending on the timing, these conditions could extend well into 2009.

Although workers in some industries will lose jobs, and new labor market entrants will have trouble finding employment, the recession will not result in massive unemployment, as we don’t have the huge labor force increases we did when the boomers were entering.

Rather, there will be significant profit declines and labor conflict, as losses in well being are allocated. Expect wage freezes, health insurance lost, more co-payments, pension freezes and an end to employer 401K contributions — all in the face of rising inflation, expecially for imported goods purchased in dollars (oil) and goods that can be exported (food).

In addition, there will be government fiscal crises, with higher state and local taxes, service cuts, and loan writeoffs and financial insolvencies. Many of the theoretical losses will be realized. The financial system will be overwhemled by the management of foreclosures.

The FED will continue to pursue a split the difference and pray policy, hoping to avoid a deep recession and/or a dollar crash and soaring long term interest rates.

Just like last 2007 only more so, in other words, but with perhaps a significant stock market correction added to the mix (I have no idea why that hasn’t happened already).

Comment by kevintx
2008-01-01 21:35:48

Very plausible scenario. The foreclosure flood might allow the feds to step in, the courthouse steps don’t seem ready for the level of trauma.
The stock market seems ready to fall as the Fed can’t fix it.

Comment by WT Economist
2008-01-01 13:50:59

I also predict Ben will finally get around to changing his subtitle, from:

Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.


Examining the home price BUST and its effect on owners, lenders, regulators, realtors and the economy as a whole.

Comment by cayo_ron
2008-01-01 18:18:58

How about meltdown? That has such an apocalyptic ring to it.

Comment by Rob
2008-01-02 00:24:42

WT Economist wrote: I also predict Ben will finally get around to changing his subtitle…

I for one would hate to see that as I like people seeing the cause of what caused the bust. :-D


Comment by Bill in Carolina
2008-01-01 13:55:33

Prediction: The most rapid part of the decline ($/sq ft vs. time) is beginning now, and the negative slope will be noticeably less, but still negative, after mid-2008. Real prices will have stopped dropping in nearly all markets by early 2009. Recovery to 2005-2006 prices will take more than a decade unless we experience hyper-inflation.

Comment by JimmyB
2008-01-01 13:57:14

The big story of 2008 will be the mass extinction of homebuilders. A huge majority will go BK as sales continue to fall, margins are zero or negative, and mass over-capacity becomes painfully obvious.

Comment by Groundhogday
2008-01-01 15:53:44

I would hope you are right, but these guys sure do seem to find a way to keep building. When builders FINALLY stop building spec homes altogether (no slower, I mean zero, zip, nada), then perhaps we’ll be nearing the beginning of the bottom.

Comment by sm_landlord
2008-01-01 16:44:03

I think more like mass consolidation, perhaps after some BKs. There will be two or three significant homebuilders still standing (barely) when this is over. And they may not be independent - Maybe Cerberus or someone takes the carcasses private with the idea of doing IPOs during the next up cycle in five to ten years.

Comment by johnbanner
2008-01-01 14:15:17

I predict Gary Watts will get hired by Burger King in May. After 2 weeks on the job, the manager will fire him for lying to customers about the weight of the all beef patties.

Comment by Ken Best
2008-01-02 00:49:19

Watt said: “Six whoppers are in the bag”. Customer found only one.

Comment by CA renter
2008-01-02 06:04:34

LOL! :)

Comment by Ouro Verde
2008-01-01 14:21:33

“my predictions-07
malibu homes will go down by a million”

Did they?

“san diego will stay the same like it always does”


“my landlord will default and i can break my lease and move”

He did a nasty short sale and I moved early.

“my friends who own multiple properties will stop talking and just go in the fetal position.”

Ok lots of people are in the fetal position, not just multiple property owners.

“Intel corp with rise from the ashes and
income tax will come down not up to help all the poor house owners.”

Intel is a “player” in the stock market and taxes are being lowered to try to help people to save their homes.

Comment by Ouro Verde
2008-01-01 14:30:06

Yesterday I caught up with an old friend from my childhood. His father is worth 1.2 Bil.
When I told him I live in the hilly coast of Oceanside I was terrified he was going to ask me if I owned. What a gent. I never had to lie or apoligize for never buying a house.
His dad was an early investor to Berkshire Funds/MungerFunds.

Comment by passthebubbly
2008-01-02 08:52:31

The true rich are always comfortable enough in their own effects that they don’t need to demonstrate their superiority by such vanity.

Comment by Renterinaz
2008-01-01 14:34:10

Won’t be as bad as some say, and sure won’t be as good, somewhere in the middle with continuing problems in the financial world, perhaps a natural disaster thrown it just to spice things up a little, government throwing in the towel and figuring out that taxes mean nothing if there is no income to tax. Unemployment to hit record highs and homelessness to increase a lot. Other than that nothing new.

Comment by bubbleglum
2008-01-01 14:40:55

I predict that this year I’ll be able to afford buying a used tractor at a farm BK auction.

Comment by Sniggle
2008-01-01 15:48:16

I too have this hope, as I plan on buying a gentlemen’s tractor this summer. I went to an auction today, and prices are still too high. Waiting for the FB’s to start wholesale liquidation of toys.

Comment by JimmyB
2008-01-01 16:50:47

Not from a farmer with commodity prices so high. Maybe from a fallen real estate “tycoon,” though.

Comment by rms
2008-01-01 20:14:35

“Not from a farmer with commodity prices so high.”

Maybe one of those 10-acre “Eddie Bauer” farmers?

Comment by Salinasron
2008-01-01 15:20:29

The market (housing & financial)in 2007 has put me in a state of calm. I’m in awe at watching things nakedly unfold against the smoke and mirrors of the MSM. Time is for the living and now that I’ve been renting for 3yrs (out of the last 37yrs) I’ve really come to value my freedom to move around at will. This year I’ll spend time fishing the Sierra’s, trip to China, trip to Cabo, etc. Yes, I’ll be watching the financial institutions and making changes as needed but I am content to wait until 2011 before even considering buying any RE. Might even consider looking over the property I’ve held around Taos since the early 70’s. A great new years to all.

Comment by calmthewaves
2008-01-01 15:28:21

Sociologically, I expect a rise in anger toward “experts”. The time may soon arise when MBA’s should keep their accomplishment under their hat.

Also, I expect more decisions will be made on the local level as the budgets and staff at the state and federal levels implode. People will disregard regulations as they sense the lack of enforcement.

In general, many people with degrees will discover just how expendable they really are.

Comment by ronin
2008-01-01 15:32:29

The media will constantly discuss, and quote various economists, to dispute whether or not we are ‘on the verge’ of a recession. According to this tack, we will never actually be in one, but just always on the verge of one.

By late in 08 the consensus will be that we will probably have just a ‘tiny,’ ‘little,’ ‘brief,’ recession. No one will ever admit a recession until we are on the other side of it. We will never have another depression, simply because the word will never be used, it will always be called, at worst, a recession.

This follows the progression that the very word ‘depression’ is just a euphemism for the previously used word, ‘panic.’ Soon we will have a new word for what we now call recession, since that word will become tainted by 09, and president hillary will be increasingly universally despised on all sides.

As the new trend is ’savings,’ and how little the average consumer is really consuming, the non-essentials will depreciate increasingly. Americans will be proud of their inconspicuous consumption. College tuitions will freeze. Some private liberal arts colleges will close their doors forever.

President Hillary will extort the public to consume as an American duty, lest we let the terrorists/global warming/name your boogey-man win.

Incumbents of all parties will face a hard time in coming elections, as they are tarred with the Hillary brush. Only the apparently non-aligned have a change for victory.

Chrysler disappears. Ford lingers, then is bought out by an Asian manufacturer. GM improves in sales and quality, and again displaces Toyota, who reputation continues to slip.

Comment by SiO2
2008-01-01 21:49:37

Ronin - good point on GM. In addition to their improved quality and product design, a weaker USD makes imports more expensive. Not so relevant for cars like the Camry, made in Kentucky. But someone cross shopping a CTS and a BMW will be affected by the EU/USD relationship. Also, GM is doing extremely well in China, and recently passed VW in market share. There’s more Buicks on the streets of Shanghai than San Jose!
Not sure about Chrysler dying though; the bailout in the 80s was successful for many years, and losing all those jobs would be really difficult for the next president to swallow. So that could be another bailout.
Ford’s not doing well in the US but they have some great cars in Europe. If they could make some of those in the US (low-cost production compared to EU), this could save them, particularly if gas prices stay high or go higher and driving to the mall in a tank falls out of fashion.

Comment by Mike
2008-01-01 15:49:05

Predications: Recession but depth unknown. If the credit crisis persists it could get very bad. Government and Fed will do the usual propaganda b.s. That is, simply, number manipulation. Bush will continue his state of denial by saying the economy is strong.

Iraq: Level of violence will decrease or level off but Iraq is mortally wounded as a country. The majority of “professionals” have left. The reason the violence has levelled off is not because of the “surge”. It’s because the terrorists have moved to cause chaos in different countries. Pakistan in particular.

Housing: A few “dead cat bounces” with buyers jumping the gun which will trap them in over-priced properties when prices break support and continue to decline. 2008 WILL NOT see the bottom. The NAR will launch propaganda commercials to try and sucker in the unwary with their, “Now is a great time to buy.” Two words: It ain’t.

Labor: Lots of strikes and labor unrest in transport and some other areas.

Politics: Barak Obama will NOT become President. Replublicans will be swept out of office in all areas and lose both houses.

Currency: The US dollar as THE reserve currency and oil currency will be replaced by a basket of currencies with the Euro being dominant.

China: The Chinese will organize and adapt if there is a recession. They are used to hardship anyway so they will weather (as will India) a recesssion much better than the US and Europe.

FINALLY: George W. Bush will go down as the most incompetent President in US history. He will have done more damage financially to the USA than any other President and his administration will gone down as the administration that trashed US credibility world-wide more than any other administration. It will also be noteworthy as being the most corrupt in recent history.

Comment by Isoldearly
2008-01-01 16:34:13

I predict real estate is going to pull the nation into a deeper recession, and auto loan and credit card defaults will share MSM time with foreclosures. It will totally tank the “toy” industry and if it gets really, really bad, there might be a reduction in cell phone use (now that’s a wild prediction given the National addiction to talking and texting).

Comment by Pondering the Mess
2008-01-01 19:27:31

I think that last bullet point really requires the addition of “until history compares him to the combined terms of the two Clintons and all they “contributed” to our society.” Trust me - you want corruption, wait until the Iron Maiden gets into office!

Comment by Jim D
2008-01-01 22:33:22

Yeah, you keep that dream alive. Short of starting a limited nuclear war, I’m hard pressed to see how anyone could outdo the Shrub.

Comment by Pondering the Mess
2008-01-02 10:08:45

If we do have a nuclear war, you can thank the Clintons for selling those missile secrets to China. But hey - that’s okay, since he can play the sax, he must be a great president. Right!

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Comment by Jas Jain
2008-01-01 16:38:59

My prediction for 2008: Fed would be proven to be impotent.


Comment by Katz
2008-01-01 16:39:15

I write from Australia. I followed a link here from Naked Capitalist.

The world is agog at the financial crisis associated with the burst RE bubble. How you folks stir when disturbed shakes the world.

Someone upthread blamed GWB for at least some of the financial problems you folks face. Is that a consensus opinion? And if it is, what did his administration do or fail to do to allow this situation?

I note that there is some disagreement among you about the need for government to intervene.

From this perspective it seems quite apparent that your government deficits are out of hand. Is that a consensus opinion there?

And if it is, is there any consensus as to whether this imbalance ought to be more redressed on the expenditure or the revenue side of the ledger?

Thank you for your blog. It is the first I’ve found that seems to consist mostly of regular folks.

Comment by Professor Bear
2008-01-01 17:29:31

“Is that a consensus opinion?”

By no means. The tendency to blame any and all economic problems on the CIC is a time-honored American tradition, which is directly related to the the average American voter’s abysmal level of economics education, coupled with a tradition among CICs to claim all responsibility when the economy is doing well. The idea that the CIC somehow controls the U.S. economy on puppet strings is fairly laughable whether times are good or bad. In particular, the seeds for the economic wins or woes of the incumbent are fertilized by the actions of his predecessor, and were planted in the distant past by defunct economists such as John Maynard Keynes.

Nonetheless, in seven out of seven elections since the mid-1800s when the U.S. economy was in a recession during an election year, the incumbent party lost the presidential election. This is why I hope and pray no recession starts until at least after November 2008.

Comment by spike66
2008-01-01 21:34:31

I hope and pray that someone willing to take seriously the oath of office, which includes protecting and defending the Contitution, wins. If this person has some semblance of integrity and a grasp of economics, it would be a plus. Ron Paul or Bloomberg. if this election breaks the two party system, it would be a bonus. The level of corruption in the present system is staggering.

Comment by travanx
2008-01-01 23:31:52

I accepted a job in Sydney recently. Hope I get to go over soon. I think its just really easy for everyone to blame Bush because he doesn’t appear to be as professional as other presidents. He gives off a goofy impression which probably doesn’t help when you are dealing with world problems. I think the main factor that the US is dealing with are some extreme growing pains that are either going to make this country stronger or very weak. I hope it doesn’t become weak, because a strong US with some form of real compassion is a bigger positive for the world. I really think Clinton’s dealings with the Chinese had something to do with what is going on now. But it doesn’t matter since it doesnt matter who takes the blame. We just need real long term fixes.

I am 28 and talking to people in Australia was an eye opener. I didn’t sense the dislike while in London the year before. But I was definately told to my face by some australians that they didn’t like Americans but were very open to listen and talk about it. My age group in Southern California are generally stupid people obsessed with keeping up with everyone else even though they are useless to this country. So its interesting to talk to others in the same age group that actually pay attention to whats going on.

And most govt agencies are a joke in California. I work for a land development company and certain govt agencies are completely understaffed and are asking our company to do their work for them. The client would end up paying us for work they already paid the Govt. fees to do. Amazing right? And they actually are understaffed. But I know they continue to hire unnecessary people to push papers for who knows what reason in other departments. I bet if half the govt jobs were cut no one would actually notice. A president needs to take a real stand on cutting the real fat out of this country.

Working for a land development company and seeing whats going on, I can positively say you havent seen anything yet in Southern California. Give it another year before anything actually happens for the home builders and everything related. I still don’t see any news about what I know is happening at a US top 5 builder out here.

Comment by marksparky
2008-01-01 16:42:09

I predict
–that the high rise condos sprouting like weeds in downtown Seattle will drop value by 15% and some of the snooty, pretentious blogs that some of the early condo buyers have started will disappear.
–that some of the old weekend vacation spots that are a convenient drive from major cities will see renewed activity and crowds, as overseas travel and flying anywhere gets less attractive.
–that craigslist or Ebay (or their active users) will start more in-person venues for giant garage sales or trade markets, using the extra-cheap vacated retail space in shopping centers near edge-of-town housing developments.
–that many Boeing early retirees will come back to work as defense contracts stay busy and their realtor-as-second-career job blows away in the dust.
–that there will be enough economic and political pressure to open the market for foreign generic pharmaceuticals despite a big fight from big Pharma.
–that a major pollution disaster will cripple some small but important section of China’s industrial base.
–that more small businesses will attempt to stay afloat on their leases or mortgages by doubling up with other businesses in the same space–e.g. dental office/art gallery, or conference room/classroom, etc.
–that illegal immigrant unemployment will skyrocket due to the disappearance of construction jobs, and the willingness of teenagers and spouses in mortgage-burdened families to apply for those ‘icky’ minimum wage jobs.

Comment by stanleyjohnson
2008-01-01 16:45:05

I predict no matter how bad things are in RE Larry Kuntlow, Bob Pisani, tom atkins, NAR, CAR and Babara Corcoran will all say it is a buyers market so buy now.

Comment by stanleyjohnson
2008-01-01 16:47:02

And lastly that Maria Bartiromo will be asking each guest what is best sector to put your money and globally everything will be better in 2 quarters

Comment by passthebubbly
2008-01-02 08:55:30

But you’ll never hear her say there’s any trouble at Citigroup.

Comment by Jas Jain
2008-01-01 17:06:36

In 1999 I predicted depression for Silly.con Valley as a result of the tech bubble burst. Bet. Mar’01-Feb’03 Private Employment in San Jose-Sunnyvale-Santa Clara MSA declined 19.92%. That qualifies for a depression. However, the housing bubble saved the day.

I now think that California will plunge into depression as a result of the housing bubble burst. Silly.con Valley will do worse because we will have the second coming of the tech bubble burst. Recession has already begun. The depression could begin as early as 2008Q4.


Comment by SiO2
2008-01-01 21:38:15

I will respectfully disagree with Jas. Silicon Valley will do better than the rest of the US, as the output is used WW not just in the US. So a US recession won’t drag down Silicon Valley as much as it would if Silicon Valley’s output is used mostly in the US. Also, the offshoring is slowing down - wages in Asia are going up pretty fast, and even fast when priced in USD.

Some side benefits of a lower dollar:
- US small manufacturing will see a resurgence. If you need to make 1000 industrial tools it could end up being cheaper to make it in the US than in Asia once you take into account quality, time to market, shipping costs, and USD vs other currency.
- Increase in production in Mexican maquilidoras, for the same reasons. Backlash against Chinese quality issues, peso is not artificially weakened against USD (thereby making Mex -> US shipments more attractive), and political backlash too. This will also encourage the jobless ex-construction workers working illegal to return. Perhaps some farm workers too, which will contribute to rising food prices.
- Recession in 08 or 09, just because of the length of the business cycle in addition to current problems. But the severity will vary by region, just like in 01. In 01 it was really bad in Silicon Valley, less so on the East Coast. In 08 or 09, really bad where there’s overbuilding (exurbs nationwide, like Cal Central Valley and Inland Empire). Less so closer into cities and also where there’s small industrial facilities (Pittsburgh comes to mind) due to the currency fluctuations. This last bit was also mentioned by a previous poster, so I’m not the only person who thinks the US is not homogenous - e.g. it’s different here.
- Inflation will rise but not to the 10% that many claim. Maybe 5%-6% including food/energy on average. But for certain individuals it will look a lot higher - if someone spends a high percentage of income on food and gas then rises there will disproportionately affect them.
Happy New Year everyone. It’s good to see the variety of opinions; I tend to be optimistic and it is good to temper that by seeing the other views too.

Comment by NoSingleOne
2008-01-01 17:14:24

For 2008, I predict that as more and more boomers retire, they will want to cash out the equity in their homes and downsize, so there will be more older homes on the market at a cheaper price, and will be the first ones that sell since they have equity. Fewer jobs will be available to entry level workers as retirements get postponed because of a lack of liquidity. More corporations will move offshore (like Halliburton).

People who bought newer homes and recent home buyers will try to hang on. Credit card debts will spike and defaults will become more common. The rental market won’t spike badly because the FBs and speculators will be taking on renters.

Crime will go up because of the diminishing social safety net and downturn in “real” wages while “real” inflation spikes. Look for the gubmint to do everything it can to hide the real numbers. There will instead be more financial regulation from the Fed, more Medicare regulation of health care, and more IRS prosecution of tax scofflaws. Americans will have the equivalent of a 10% increase in taxes from price inflation and higher credit card interest rates with stagnant wages. However, there will be no “new taxes”, at least until ‘09 when the new prez takes office. By then we will resemble a police state.

Foreign stocks will rise while domestic ones slowly founder. Gold/silver/oil/commodities will inch up, but the trade deficit will start to improve at least. A recession will definitely happen, but it will be a slow creep over several years. Greenspan and Bernanke will be touting increased regulation, except on companies quietly leaving the country looking for decreased wages.

I’m not looking for an economic recovery until 2013 at the earliest.

Comment by hwy50ina49dodge
2008-01-01 17:17:04

2008 Looney Tunes:

Bugs: “The Chinese will buy Warner Bros.”
Daffy: “That’s Dissssssssssssssssssssssssssspecible” ;-)

Comment by novasold
2008-01-01 17:36:11

I predict that there will be massive Q! stock market drops b/c of financial disclosures that a major US bank or two are not having liquidity problems but are insolvent.

Why do I predict this? B/c of the 08 election. The Republicans will push for the truth to be brought to light sooner rather than later so the pain of it will be less evident by the election, or so they think. You will see an increasing amount of investigations by the SEC of the IBs launched in Q1. The real sign of this will be when the republican candidates begin to point the finger at the Bush appointed regulators for not stopping the housing mess from happening.

I’ve already heard of people putting their toe into the housing market at work. They are being told that borrowing rates are going higher (that’s true) BUT that prices are not going to go much lower. This leads me to believe that FBs will continue to be in denial until a major stock market event happens and the MSM news begins to report on the housing market as it is, for political reasons. The housing bubble and it’s ramifications will be the number one issue in the election.

Foreclosures will not peak until the fate of underwater ‘prime’ loans are determined. When prime borrowers come out of denial and see that they are sitting on a massively depreciating asset, do they jingle mail or stick? I think jingle mail. I don’t know when foreclosures will peak but believe that will be determined by capitulation in attitude on the housing market or when we reach that point where the word on the street is that now is NOT the time to buy a house. That phrase has never been uttered in the media as far as I have seen.

Txchick will be able to take the rest of her life off after this year in the market. She will acquire a controlling share in CROX when it tanks and revive the company in the long run.

MSNBC will violate their five year agreement with Jim Cramer and he will sue them.

Happy New Year. Best to you all.

Comment by Dont Know Nothin About Buyin No House
2008-01-01 17:52:30

A prediction for 4 years from now. The poor sap or sappette unlucky enough to get elected in 2008 will not be re-elected and possibly even impeached. Joe 6-pack and the world place all blame on the new US Pres. Although people heard about the housing crises/credit issues pre-election, they have short memories and won’t connect the dots to the originators. I also predict Ben’s filing system is advanced enough to re-publish this post in 2012.

Comment by cactus
2008-01-01 18:09:44

Recession in 2008 and the FED will continue to lower interest rates down to 3.5%. Stock market will go down 10-20%. Home prices will fall 10%-20%. US dollar will trend lower against other currencies especially fast growing Asian countries. Commodities will go up against the US Dollar. RE agents and Loan brokers will be mocked and pariodied often in 2008.

Comment by Blue Skye
2008-01-01 18:25:35

I predict that things will unfold much more slowly than I expect. By the time that I accept that, I predict that things will unfold much more quickly than I expect.

Comment by lavi d
2008-01-01 18:33:06

I predict that in 2008 I will find a 2-bedroom, high-rise condo on the strip (not just “near” the strip) for rent at less than $1500/mo

I also predict that the energy-dependence pendulum will begin to swing the other way as more and more people do more “green” things and advanced technology cracks the renewable, cheap, clean energy nut.

Comment by aladinsane
2008-01-01 18:35:20

Climate change during 2008, in the guise of the drought…

Will cause many to leave areas, so stricken.

Property values in San Diego will get the biggest hurt, in the Golden State.

Overbuilt and underwater, in more ways than one…

Comment by Professor Bear
2008-01-01 19:14:24

“Property values in San Diego will get the biggest hurt, in the Golden State.”

The only water shortage I anticipate down here is the man-made variety due to favoring the welfare of a three-inch fish in the Sacramento delta over that of human inhabitants of SoCal.

Last modified Tuesday, January 1, 2008 3:02 PM PST
Fire, wind warnings extended; heavy rain forecast
By: North County Times -

SAN DIEGO —- The National Weather Service extended a Red Flag fire warning for San Diego County mountains and valleys until 2 p.m. Wednesday, and predicted heavy rain for the area beginning Thursday and getting stronger through the weekend.


Comment by aladinsane
2008-01-01 19:30:56

San Diego:

Meet a smaller adversary, already in 5 of your reservoirs…

Delivered via the Colorado River, starting from around Hoover Dam in January, and making it to your first infected reservoir, in June.

Scroll halfway down to the map of the USA, and see how infected your water system is…


Read how concerned the city of angles is, about quaggas.

“An invasive mussel first detected in California less than a year ago has surged across the state’s southern counties, stirring concern that its spread will inflict costly damage to public water systems and fisheries statewide.”

“The infamous fresh-water quagga mussel, which has wreaked havoc in the Great Lakes, multiplies so quickly and prolifically that it forms large masses that can clog water pumps, pipelines, power plant intakes and farm irrigation lines.”

“Its rapid-fire invasion this year from Lake Mead — which straddles the border between Arizona and Nevada — southwest to San Diego is alarming water officials in a semi-arid region that heavily depends on imported water moved through a vast network of pipelines and canals.”

“The quagga already has infested the 242-mile-long California Aqueduct, five San Diego County reservoirs and two of the three largest reservoirs in Riverside County operated by the Metropolitan Water District, which supplies Los Angeles with most of its water.”


And rainfall locally for you, means not much…

“The Colorado River is a major source of supply for cities in San Diego County as well as the Imperial County towns of Calexico and El Centro. San Diego County cities also rely on water from the State Water Project, with groundwater comprising only a small portion of the county’s overall water sources.”


If I owned a home in Tijuana-adjacent, i’d be selling it for whatever I could get for it, now.

Comment by Paul in Jax
2008-01-01 20:13:37

The whole idea of worrying about climate, rainfall, etc., is so 2007.

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Comment by MacAttack
2008-01-01 22:09:00

You must not have been around for the Organization of Water Exporting Counties (OWEC) and the battle for the Peripheral Canal. As far as I’m concerned, SoCal can just desalinate their water - maybe they’ll have some respect for it. it’s not just about a fish, it’s about the natural flushing process in San Francisco Bay.

Comment by Chip
2008-01-01 18:44:57

I’ll stick with my prediction of last year, that prices will revert everywhere except where there is a dramatic change(new mfg. plant, etc.) to 1997 prices plus 3.0-3.5% per year for inflation after an initial overcorrection. I thought this would occur in 2009 but Bernanke may have screwed that and it could take until 2010-2012. However, by 2009 I might be making offers based on 2012 prices.

Comment by aladinsane
2008-01-01 18:58:53

Boomers with the resources, will continue their migration away from bigger cities and increased taxes, crime and malaise…

The U-Haul rates for renting a moving truck, going from Big America to Little America, are many times the rate, of going the opposite way.

And there is just so much of Little America considered pristine, so property values in the right locations of it will do well, as the Great Escape era starts in earnest…

Comment by Professor Bear
2008-01-01 18:59:59

Sign of a market about to tank? Little old lady investment clubs that use group think strategies to figure out how to go long into individual stocks come back into vogue…

Throughout 2007 I made several visits to the women of Formerly Baroque. They’re an investment club in Virginia. Twelve ladies in their 50s and 60s who meet once a month to talk stocks.

Bobbi: A group of women decided that they didn’t know very much about finances. And a lot of our women were single, either divorced or widowed.

Other woman:

And that’s, I think, one of the last holdouts for women — getting into finances, getting into investing. This is an area women really need to get savvy in.


Comment by Pondering the Mess
2008-01-01 19:04:41

My own predictions:

- Continue decline in the living standards across the US. Crumbling middle class, eroding job base, lost benefits, shrinking pensions (oops, did we put all your money in toxic sludge - sorry!), unsteady and wobbling stock market and financial industry.

- Much finger-pointing and screams from the sheeple and people in power to “do something” about the problem - “something” in this case means punish the responsible and rewards the stupid, greedy, and crooked. I don’t know if anything will become of it, but it will be a real battle with various sides wielding assorted threats.

- Continued propping up of the US banking system by foreign powers, many of whom hate our nation. Somebody at some point will wake up and notice the security issues this creates with our banks being controlled by people who don’t answer to our laws and who don’t like us. That person will be silenced in some fashion.

- The housing decline will be slow and painful. Anything to avoid a return to reality. Anything to avoid people having to live within their means. Anything to avoid having the scammers, debt-pushers, and money-changers face the music. Oh, and we wouldn’t want the savers and wise folks to be able to buy a house when the suckers can’t - that wouldn’t be “fair.”

- At some point, this whole thing will become part of the upcoming presidential campaign. Assorted horrible ideas to “save” the economy will be paraded around. Most will be forgotten, though I fear whatever comes to pass will be bad enough.

- Whoever wins the presidential election will learn the concept of the “winner’s curse,” but that won’t mean that he or SHE won’t be able to royally screw up our nation in 4 years.

In short, I see a crumbling nation, revealed to be naked as the Emperor who has no cloths, filled with debt people screaming to be “saved” from their own stupidity, corruption, and greed. I just hope that their wrath ends up directed towards the Wall Street and corporate pigs that got fat off their suffering as opposed to those of us savers who stayed out of the fray and refused to play the Debt Is Wealth game.

Comment by Professor Bear
2008-01-01 19:08:33

Can anyone recommend strategies for going short stock market indexes based in cities whose names end in “ai” (e.g. Shanghai, Mumbai)?

Asian Markets Strong in 2007
By THOMAS HOGUE – 1 day ago

BANGKOK, Thailand (AP) — Asian stock markets had a strong, if volatile, year with China leading the pack as investors bet on the region’s continued growth prospects.

Several exchanges notched gains of more than 20 percent and among Asia’s major markets, only Japan and New Zealand ended the year with losses.

But the outlook for 2008 remained clouded by soaring oil prices, accelerating inflation in both China and India, and above all, the health of the U.S. economy.

“More will be revealed after one or two months of data on the U.S. side to see what’s the state of the U.S. economy, especially the consumer spending,” said Song Seng Wun, chief executive of CIMB-GK Research Pte. Ltd. in Singapore.

If (the U.S. economy) can hold, then we should be reasonably intact,” Song said.

And if pigs could fly, we could hunt pork from a duck blind.


Comment by gillsie
2008-01-01 19:35:04

Look at FXP - it’s an ultra short ETF based on the Chinese stock market

Comment by Professor Bear
2008-01-01 19:43:43

Thx — Is there anything similar for Mumbai?

Comment by vozworth
2008-01-01 19:53:53

NEW YORK, Jan 1 (Reuters) - The New York Stock Exchange has set its criteria for trading halts in the event of a steep market drop, making only slight changes for the first quarter from the fourth, according to data on the NYSE Web site.

There will be a one-hour halt in trading if the drop happens before 2 p.m., a 30-minute halt if the decline occurs between 2 p.m. and 2.30 p.m., and no halt after 2.30 p.m., according to the NYSE.

tinkering with the collars…testing is set to begin in about 12 hours.

Comment by Betamax
2008-01-01 19:11:28

“I predict a lot of pain.”

- Mr. T.

Comment by Ouro Verde
2008-01-01 19:20:11

My 2008 Predictions:

I think that so much happened last year that the worst is already here. From here on out will be a few years of “working out the kinks”.
The only thing that hasn’t happened is drastic price reductions and we may never see that in SoCal.

Comment by Jim D
2008-01-01 23:24:23

Oh, you guys, you’re killing me!

No price reductions in SoCal? Really? Is that because Unicorns are going to buy up all the houses then?

Comment by CA renter
2008-01-02 06:20:44


Didn’t you say you lived in O’side?

If so, I’ve already seen one new listing priced around $30K more than the 2000 sales price. Prices are down **at least** 30% in many parts of O’side.

Not sure what you’re talking about????

Comment by Ouro Verde
2008-01-02 08:25:27

As long as houses in Encinitas are still in the 500’s its still too expensive.
O’side should be 250k max.

Comment by CA renter
2008-01-03 01:06:20

Patience… :)

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Comment by Eggman
2008-01-01 19:26:37

Although it may not come until 2011 or 2012, I predict that you will eventually see banks walking away from houses and leaving them to municipalities.

Comment by dude
2008-01-01 20:33:41

Thanks for that.

Comment by Chip
2008-01-01 22:07:15

That one’s pretty interesting.

Comment by implosion
2008-01-01 22:48:31

Hasn’t that already happened in a few places? Swear I read about some midwest city where it is already happening.

Comment by Paul in Jax
2008-01-01 19:46:12

Sorry about the long url, but anyone who thinks we can’t go from 4.9% GDP growth in one quarter to recession in the next:


Comment by Professor Bear
2008-01-01 19:52:11

This sounds wrong…

Recession risks
Published: January 1 2008 20:21 | Last updated: January 1 2008 20:21

Whatever the inflationary risks lurking in the US economy, recession is the fear that is keeping policymakers up at night. Rightly so. The long-resilient US faces a series of blows that will cut into growth. The residential housing market is dealing with an almost unprecedented nationwide fall in prices. Meanwhile, unstable credit markets, roiled by the subprime crisis, could have a significant impact on the availability, and price, of credit.

How big will the impact be? US growth will certainly slow. But a house price correction in itself should be manageable, unless it turns into a freefall. After all, the pain so far has been concentrated among poorer, subprime borrowers, whose spending is very small in the context of the overall economy.


Comment by housing hanky panky
2008-01-01 20:02:10

I predict Prof Bear may become G.S. again :wink:

Comment by tcm_guy
2008-01-01 20:14:23

I predict that in some of the bubbliest regions the supply of SFHs and condo-closets will be greater than ten years. Some parts of FL now have five years supply.

Comment by pismoclam
2008-01-01 21:03:46

Where is GetStucco when we need it?

Comment by novawatcher
2008-01-01 21:19:47

I predict NoVA* will be off 18% ±2% by this time next year.

If that sounds big, well I was browsing NoVA on ZipRealty and came across construction listings $480-500k for a new 3000 sq ft houses in South Riding. That’s over $100k less than the listed prices for equivalent used homes.

* Based on Housingtracker.net V1. Places like McLean and Oakton will lag, whereas PG and Prince William will lead the way.

Comment by sam
2008-01-01 21:22:25

one down 4 more to go….

1. what happens when all those PE firms tries to offload the companies they purchased in M&A boom as
they can no longer “re-finance” their short terms bonds
2. raising CC deliquencies
3. Auto loan deliquencies
4. Student loan deliquencies.

2007(subprime) looks like a walk in the park

Comment by Mormon_Tea
2008-01-01 22:26:44

In 2008 housing prices will fall throughout the year. But sadly, the bigger story will be with people.
2008 looks to be shaping up as a desperate time for many newly desperate people. Look to see hefty increases in layoffs, delinquencies, bankruptcies, foreclosures, jingle mail, repossessions, crimes, divorces, domestic abuse,drug and alcohol abuse, abandonments, shootouts, hunger, disease, malnutrition, and runaways affecting millions of families across the U.S. like never before. The business and economic reality, the New Depression, is my prediction. It will historically mark the end of a worldwide Revolution of Rising Expectations that began with the end of WWII. Of course, the “winners” of the new era will decide what it is called in the future, as they always have.

Comment by CA renter
2008-01-02 06:22:40

Second that.

Comment by tiger
2008-01-01 23:00:18

Obama for 2008. I don’t make a lot of predictions. Maybe 3 ever all of which have come true. I’m VERY intuitive and accurate in my predictions. Obama WILL win in 2008. I know this for 99% true.

Other than that, national home prices down more than last year. Talk of a recession and an actual recession. Regional price decline more dramatic than last years, but not much more, not that that matters. It will be a multi year declines.

Comment by KirkH
2008-01-01 23:22:08

Housing lead recession starting Q2 ‘08. The Fed is going to cut rates too late, it’ll get down to 0% but it won’t matter. Just like it didn’t matter in Japan.

A democrat will win as the economy falters. Religion and small government aren’t going to sell when people are clamoring for a newer deal.

The wealth divide will continue to grow due to automation and outsourcing meaning an eventual recovery won’t feel like a recovery. Housing market is toast.

Comment by combotechie
2008-01-02 00:31:00

My 2008 predictions are:

1. It will be revealed that EVERYONE saw the coming decline, that it was so obvious only a blind fool could have missed it.

2. The absolute, final, solid, rock-bottom prices in RE will be reached many times in 2008 and into 2009.

3. Cash will be scarce, debt expensive. Cash will rule because cash will be king.

4. The American people will begin saving money.

Comment by tj & the bear
2008-01-02 00:38:24

Wow, found my post and see that (as usual) I was a wee bit early on some calls.


Postponed to 2009. Everything takes so damn long!

The stealth recession that started in ‘05 becomes sorely evident to everyone in ‘07.

Obviously one year early on this one.

* Foreclosures & bankruptcies soar as inventory climbs beyond 12 months nationally and homebuilders lead median prices lower (15+%) trying to maintain sales. Sub-prime lending is decimated.

Woo, body shots!

* Plummeting retail sales & mounting REIC job losses send stock markets into a tailspin (down 20%+), reasserting the secular bear that started in 2000. More than a few hedge funds self-destruct.

Again, one year too early.

* Oil tops $90 a barrel as production at Ghawar declines precipitously and mideast tensions heighten over Iranian nukes.

Kill shot.

* Blatantly obvious inflation aggravated by the weakening dollar force both the Fed Funds & Treasury rates higher; mortgage rates climb 2+% to offset increasing risk.

Okay, mostly screwed this one.

* Auto sales evaporate, pushing GM & Ford into bankruptcy.

* Plunging tax receipts push all levels of governmental budgets seriously into the red.

Yet again, one year too early on both.

Guess I don’t need to do much more but allow my past predictions a little more time to play out. Pass the popcorn.

Comment by CA renter
2008-01-02 06:24:23

Saw your predictions on the 2006 link & thought they were very accurate, for predictions.

Congrats! :)

2008-01-02 01:00:38

2008-01-01 22:53:00
I wrote on December 1st 2007


‘Massive Job Losses’
When? ‘Early Next Year’
‘Pushes stick forward on housing collapse’ (Airplane reference. Pushing the stick forward on a plane puts it into a steeper dive)
‘Leveraged Assets Fail’
‘Pension Plans Fail’
‘Reactionary pullback in spending speeds collapse’

Later on I expect; “despair,anger,violence, and political upheaval”.

August of ‘06 I posted the following on the web but took it down later-

“As I sat in the Costco food court, sipping a coke, a visual image along with a feeling came into my mind. I saw my wife and I at some future date having a despaired discussion. A feeling of hopelessness hung like a pall over the scene. We were cleaned out and unable to make a house payment. The money we had put down was gone and we had nothing. The American dream had become a noose around our necks. I sensed that this was at least a nationwide thing and that there was pain everywhere.

This was back in March of 2006. I had watched the housing market and was contemplating purchasing a house. Something didn’t feel right so I was trying to tune in. I have always felt that I had some level of intuition but also have had a lot of doubt about my ability to “bet the farm” on that intuition. I heard that the conscious mind is the intuition’s biggest critic, so I decided to open the door and listen, but to back that up with LOTS of research.

I discovered that astute analysts have been warning about the housing bubble for at least two years and that the warnings have gotten louder in the last several months. The mass awareness of the bubble broke wide open yesterday, August 23rd when the bubble was the lead story on ABC, CBS, NBC, and The Drudge Report. The domino effects of this process will be admitted into the mass awareness later and with great resistance.”

Comment by Halifax
2008-01-02 02:05:43

spot London gold >1000
Case-Shiller 25% off peak
10-yr UST 300 bps
Euro >1.7

Comment by Halifax
2008-01-02 02:14:05

spot London gold >1000 USD
Case-Shiller 25% off peak
Dow 300 bps
Euro >1.7 USD

[scrambled by PocketPC]

Comment by Halifax
2008-01-02 12:55:13

spot London gold 1000USD
Case-Shiller 25% off peak
Dow under 12500
LIBOR over 300 bps
10-yr UST under 4%
Oil over 200USD
Euro over 1.7 USD


Comment by Bye FL
2008-01-02 02:15:33

Why would banks walk away from houses they own free and clear when they can sell them for pennies on the dollar instead of give them away? Check Zillow zindex for 1998-1999 this is where prices will drop to. Let me refresh you:

Prices should drop back to 1998 levels. The peak was 2005-2007 depending where. Checking Zillow, the median prices in 1998 are shown below.

USA median price to fall to $115k
Pittsburgh, PA median price to fall to $64k
PA median price to fall to $94k
FL median price to fall to $76k
CA median price to fall to $153k
San Jose, CA median price to fall to $246k
Gainesville, FL median price to fall to $71k
Cape Coral, FL median price to fall to $84k
Ocala, FL median price to fall to $57k
West Palm Beach, FL median price to fall to $67k*
Miami, FL median price to fall to $101k
Port Saint Lucie, FL median price to fall to $68k
Palm bay, FL median price to fall to $63k
*Probably due to all those 55+ retirement homes.

I will be moving to NW Pennsylvania as soon as this summer and buy something cheap for $15k to $50k and live there a few years and when prices become crazy cheap elsewhere, I may consider relocating again(unless I like NW PA enough to stay) otherwise im looking at the west coast or the mountains on the east coast(rocky mountains probably won’t be cheap enough and I might not like the harsh winters) I expect to get a nice big house(2000 square feet) on like 3 acres of land for around $100k when this bubble bottoms out.

Comment by jetson_boy
2008-01-02 10:10:54

No offense… but how come almost 90% of the people here only look at roughly 3 places to relocate to? It’s either the east coast, west coast… or Colorado. Interesting phenomena. There’s more options out there.

Comment by crush
2008-01-02 02:50:19

I predict that due to the crazed back-to-back build-up, then bursting of two major asset bubbles in the eary 21st century…bubbles both marred by fraud and covered up by regulators in the form of extreme moral hazzard will be the cause of what many heretofore shall refer to as the Great American Repression that started shortly after the decline of the housing asset bubble circa 2005.



Comment by CA renter
2008-01-02 06:27:03

I think 2008 will see the official acknowledgement of the recession that began in 2007.

There will be many attempts to artifically prop up the banking industry — and, by default, the mortgage and real estate industries. All will fail, with the only unknown being how much taxpayer money they will burn on the way down.

The jaw-dropping (30%+) YOY sales volume declines will slow (but not stop), prompting more calls for “the bottom”. Maybe sales will be 10%-15% lower than 2007. Much of this will be due to a number of bank consolidations and receiverships — forcing inventory onto the market.

The “surprising” numbers this coming year will be price drops, as what we’ve seen on the streets will finally make its way into the statistics. I think we’ll see **official** 30%-40% price drops, YOY, in SD County.

Lending institutions — perhaps with the assistance/insistence of govt regulators — will turn to auctions in order to get the market moving again.

All this is just MHO.

Happy New Year, everyone! :)

Comment by Xpovos
2008-01-02 06:51:06

My prediction is in the new lingo we will hear. The buzz-word of the year will be, “statistical recession.”

That is, a quarter of recessed growth more than the margin of error in the study, say -0.07% +/- 0.03% followed by a quarter of marginal growth 0.01% +/- 0.03%. We’ll have avoided the technical economic definition of ‘recession’, and that’ll be bally-hooed by the bottom callers and bulls, but there’ll be enough other bad news that the people who follow that guy with the dog-biting hobby will talk it up to a new angle.

Comment by KIA
2008-01-02 09:18:54

Best estimates from the trenches:

1. Foreclosures will continue at record rates. Foreclosure counsel with whom I have spoken report no decrease whatsoever in numbers of referrals (leading indicator) and suggest that the foreclosures are spreading past the initial problem areas into areas which were thought to be less susceptible.

2. The deferred stock shenanagins will become obvious in January-February, 2008. This will include much larger losses than were suggested in pre-release warnings and a great deal of “disappointing” results. This will be most noticeable in the homebuilders and financial sectors. Banks will be forced to begin marking a lot of REO to market and their losses will accelerate. Because the pros on Wall Street understand and expect this, look for marked drops in the equities markets prior to earnings announcements.

3. The Fed will attempt once again to take care of its constituent banks by lowering interest rates under the guise of “stimulating” the economy.

4. Capital flight will begin in earnest as lenders realize they cannot risk their money at such low interest rates. Loans will become excruciatingly difficult to obtain again, and the real estate market will experience its own version of a silent spring. This will cause real panic among marginal homeowners who will begin to see that their houses are underwater, and who finally begin to understand that they will never be able to refinance their way out of trouble.

Expected responses: a) Government-backed foreclosure “holidays” which will exacerbate the banks’ problems while getting “feel-good” votes for the upcoming elections; b) smart lenders may suddenly decide to “self-finance” their REO properties, offering apparently good deals to convert the nonperforming assets to performing loans; and c) the government will continue to carry on two wars and employ gross overspending in order to avoid raising unemployment and to continue “stimulating” the economy by its own credit fiesta. All of these actions are calculated to, and may actually cause, false senses of security, that the situation is “being handled.”

Possible crisis: large numbers of banks may become insolvent to the point where they must openly confess the problem. This is plain truth: it can happen, it has happened many times in the past, and it can happen again. If the sheer numbers of REOs, the capital outlays necessary to carry the properties and protect against loss (e.g. real estate taxes, hazard insurance, winterizing and securing, marketing), regular operating costs, write-downs, and other cash demands become excessive, it is not only possible, but likely that large numbers of lenders may enter receivership. What happens then is anybody’s guess, but it will not be good. We have already seen lenders selling pieces of themselves for foreign capital. This may increase for a time until the foreign bubbles and crises manifest themselves.

I’d like to take this opportunity to remind people: keeping some cash in a secure location is the best insurance you can buy. The opportunity cost of a $2,000.00 stash is, perhaps, 5% - the rate which it could obtain in a CD. This equates to $100.00 per year in money which is simply not realized. Losses due to the decline of the dollar against foreign currency is not defended against by most investments anyway, so is disregarded. You can’t get any other type of insurance for $100.00 per year.

It also wouldn’t hurt to use a portion of that stash to increase stocks of canned food or other storable consumables against the possibility of a short-term disruption and to hold it in these tangibles.

Happy New Year, keep your powder dry and your loved ones safe.

Comment by KIA
2008-01-02 14:03:03

Additional points of concern:

A) People are now being sued by sellers for broken contracts, seeking the difference between the (then) contract price and the eventual resale price. There are a metric truckload of people who thought they had financing and were caught short or lost that financing who are exposed to this liability.

B) Perhaps not so coincidentally, bankruptcy filings are up - way up. Dockets which used to have 40-60 cases on them are over 180 as of this morning.

C) Other dockets primarily collection and landlord-tenant dockets are absolutely swamped- standing room only. Dockets which used to have perhaps a dozen people in the courtroom and lasted at most a half-hour now have fifty to a hundred people and take three to four hours.

Comment by CA renter
2008-01-03 01:12:22

Thanks, KIA!


Comment by jetson_boy
2008-01-02 10:08:49

I think it is almost impossible to predict what will occur. But I have a few guesses being in California. There’s a few scenarios here. For one, I have no doubt that there’s a sort of micro-tech bubble in the Bay Area. This could go one of two ways: Either the boom grows and overtakes the housing boom. This in effect will raise rent as it already has started to do. The difference this time is that unlike the first tech bubble, tech companies are being a bit more ‘conservative’ with their pay. Meaning: 100k or less is what you can expect to be paid, which given current home prices is still insufficient to buy a home here.

So… I can see a new wave of young college hopefuls moving out to create yet another era of money-grubbers who will probably help drive rents sky-high once more. But I wouldn’t expect housing prices to rise. In fact, If anything, they’ll probably decline, but admittedly in a more sluggish manner than other areas.This is because of the aforementioned conservative pay structure and the increasing lack of families who will want to call the area a permanent home.

Secondly, over half of the Bay Area’s population is approaching retirement. I know for fact that many have high hopes pinned to their home’s value and its ability to cushion their retirement in other states and areas. These boomers are all going to retire at once and flood the RE market, which will probably suppress prices.

The BA has painted itself into a corner. There is economic opportunity for business, but little personal opportunity for those who want a decent middle class lifestyle. These two are needed for a consistent economy.

Comment by SeattleMoose
2008-01-02 10:49:16

1. Blogs banned for “national security” reasons
2. Government comes out with new slogan “We’re All In This Together” as excuse to jack taxes to pay for Bush War and Bank Bailout
3. Cheney dies of heart attack to world wide celebration
4. U.S. enters recession
5. RE prices drop another 15% during year
6. Ads for “luxury items” and for travel increase
7. Financial meltdown spreads around world
8. Talk of a global currency as possible solution
9. Every talking head RE shill who in 2007 was a RE bull, now says “we saw it all along”
10. Government stages another terror event to try and mobilize country for continued “war” against….fill in the blank.
11. Camps for growing homeless population spring up with usual results…crime and disease
12. The same government and financial “leaders” who let this all happen start floating solutions that further erode our standard of living and personal freedoms
13. Most vocal opponents to Government/Financial industry have heart attacks, car wrecks, and plane crashes

It is going to be a bad year made worse by the simple fact that solutions will be put forward by the very same people on whose watch this all happened.

Comment by jbunniii
2008-01-02 13:04:25

Call me crazy, but I think that in 2008, the Bay Area will finally crack. I predict at least 10% YOY median price declines in San Francisco, Marin, San Mateo, and Santa Clara counties.

Comment by NOVA Renter
2008-01-02 13:41:59

I think there’s a good chance there will be a dead cat bounce this year. I predict in the spring the realtors will report increased “sales”, which will lead to the MSM declaring a bottom and any remaining foolish buyers jumping in to the market. Shortly after that there will be tons of the reported “sales” fall through because buyers not being able to close, some people will get stuck with two payments after thinking their homes were going to sale and bought a new home before their existing home actually closed, etc. After the 1-2 month increase in “sales” in the Spring, prices will begin dropping even faster than they have to date. Foreclosures will also rise to new heights as some desperate sellers refuse to lower prices. More and more REOs will make it to the market and more short sales will be accepted. Smart banks will streamline the process to get responses to offers faster than currently in an effort to move properties as more and more come on the market.

Comment by crush
2008-01-02 13:54:21

let it be known that crush was/will be right

Comment by janna
2008-01-02 15:01:04

I just have one little prediction for 2008, though I think it could be 2009 or 2010 even before it happens. I think that local sheriffs will stop enforcing evictions for foreclosed borrowers. I think the volume will so grow so large, that they will e overburdened and seek to charge fees to the lender. In addition, I think the pushback will be so fierce, that in some municipalities and counties, the departments will decide that the task poses too much risk to their officers. There will either be indefinite squatting, or private enforcers of the blackwater type enforcing evictions, as they do not have to be voted into office as many sheriffs have to be.

My thoughts, fwiw.

Comment by KIA
2008-01-03 08:23:58

You are not far off. The sheriffs’ offices in NOVA are, in fact, overwhelmed. They no longer have the time to stand around and oversee “physical” evictions wheremoving crews take loads of contents out to the curb. They now do “lockouts” where they stay long enough to see the locks changed, then instruct the lender to keep the contents safe for 24 hours, then permit the lenders to do whatever they want with the contends thereafter. Despite this dramatic, time-saving, and (for the lenders) risky change - because for some reason evictees always claim they had grandma’s gold bullion stashed in an upstairs closet but the lender *STOLE* it - sheriffs are still running 3-4 weeks behind.

Comment by Colin Jensen
2008-01-02 15:34:52

Since I was 1 for 4 last year, I’ll redeem myself by reusing two of my failed predictions from last year:

1. 20% year-over-year national median price decline by the end of 2008.
2. 20% year-over-year California median price decline by the end of 2008.

(I wasn’t that far off last year, but this isn’t hand-grenades and “close” doesn’t count).

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