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Any Predictions for 2010?


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2009 Dec 23, 7:18am   24,950 views  116 comments

by inflection point   ➕follow (0)   💰tip   ignore  

The new year is just days away.

Anyone have any thoughts about what news item will grace Patrick's housing crash forum next year?

Just think you could be the next Nostrodomous.

#housing

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1   Â¥   2009 Dec 23, 7:45am  

There are so many bad things that can happen.

Eg. the 10 year moving through 5%. Given all the debt we have to reissue every month now I don't even want to think about it.

Wage inflation is only going to come via price shocks to the wage-earning population we call J6P. Back in the 1970s J6P could get cost-of-living salary adjustments with employers as the system inflated up & out.

But these days many J6Ps are competing with the Wangs and Kumars of the world making a fraction of US wages, and increasing personal productivity is making many office and industrial jobs redundant even without offshoring pressures.

Plus so much of our economy is BS consumption, marketing, F/I/RE, and that's not even considering the $700 billion we're spending on war. That's seven million $100K/yr jobs, with limited actual wealth creation that will benefit us in the future.

If the US of A had a 10-K, I think we'd have a Going Concern warning from the auditors.

2   Â¥   2009 Dec 23, 7:48am  

E-man says

Home prices will increase 5% compared to 2009.

This is going to depend on prevailing interest rates. If they stay under 5%, perhaps. If not, I fail to see how this is going to be possible, unless other "affordability" measures are taken like outright payment assistance.

3   ZippyDDoodah   2009 Dec 23, 8:24am  

Bubbles never deflate in a straight line. The current bounce in home prices in some markets is almost entirely the result of artificial lowering of interest rates coupled with govt spending through tax credits and loose credit money with HUD. E-man makes an interesting prediction, but I'll take the other side.. home prices will drop 10% average nationwide in 2010 as compared to 2009 even with massive govt deficit spending to prop it up. The S&P will hit a euphoric 1350 on the "hope" that things are turning around before sliding below 800

4   ch_tah2   2009 Dec 23, 8:56am  

Well, no one's gonna call you Nostrodamus for predicting what everyone else says - a smidge up, a smidge down. I'll say 25% price increase nationwide.

(I sure hope not)

5   justme   2009 Dec 23, 8:58am  

What Zippy says sounds about right. Troy as well.

6   inflection point   2009 Dec 23, 9:07am  

I would really like to know how much longer the government can keep all the all those balls in the air:

1. House prices
2. Money Supply
3. Bailouts
4. Fake GDP, unemployment and other statistics.

Anyone notice GM is offering 0% financing for 72 months? How do you feel about funding that?

7   ch_tah2   2009 Dec 23, 9:11am  

What is to stop them? People in the streets are more worried about fictional "death panels" than they are of the gov't propping up housing artificially. Actually, it seems most people are happy about it. As long as housing looks ok on the surface (e.g. prices going up; foreclosures decreasing), the people seem to be ignoring all of the potential consequences.

8   inflection point   2009 Dec 23, 9:16am  

I am not so sure all people are happy about it. Most feel they have no control.

Fortunately, I believe that there are certain laws like gravity are self enforcing. You are subject to the gravity regardless if you believe in it or ignore it.

All this nonsense will come to an end.

9   B.A.C.A.H.   2009 Dec 23, 9:26am  

The movement that Glen Beck is the poster boy for will try to make subliminal messages, or maybe even overt ones, that the same behavior of Tiger Woods can be expected of President Obama.

10   Â¥   2009 Dec 23, 9:27am  

inflection point says

Anyone notice GM is offering 0% financing for 72 months? How do you feel about funding that?

That's actually a good idea because it is funding actual wealth creation -- personal transport -- and hopefully more gas efficiency that lowers our collective wealth transfer to the unproductive oil exporters. GM isn't making a lot of money on its cars so there's no obscene profit margin being supported here, and cars do have a 6 year service life -- my 2000 Miata is still going fine.

The problem with 0% home loans would be the inflationary effect it would have on land values. I can comfortably afford a $350K place at 5% interest, but at 0% I'd want to borrow as much as I could -- at least $500K -- since most of the monthly housing cost would be going to principal. This would essentially double home prices, without any actual new wealth creation, since the cost of production of land is ~$0.

If I were King I'd focus on productive, wealth-creating enterprises. Mass transit. Construction of public spaces like schools, libraries, hospitals, parks -- you know, the New Deal WPA stuff. Increasing efficiency with urban traffic control, industrial R&D -- there's gotta be more inventions as useful as the internet we can seed & see commercialized.

The bottom line is that 10% of the country owns ~70% of the wealth. This is the major drag on becoming a more productive and prosperous society. We don't need to kneecap wealth across the board, but we do need to liquidate the rentiers among us, or at least sufficiently tax their parasitical business models to encourage them to find more productive uses of their capital.

11   ch_tah2   2009 Dec 23, 9:27am  

I don't know economics well, but what is the parallel of the law of gravity to the government inflating their currency? I don't know of any reason why the government can't print their way out of this problem. That's not to say it won't create different and worse problems down the road, but if that's their plan, what/who is going to stop them?

12   Â¥   2009 Dec 23, 9:30am  

camping says

what/who is going to stop them

Mr Bond

13   toothfairy   2009 Dec 23, 10:51am  

I predict we'll be back to boom time in 2010. The big surprise is that people are back to behaving like the recession never happened.

FED will officially hold interest rates too low for too long and that will be the tipping point for higher inflation.

14   seaside   2009 Dec 23, 11:24am  

I think the housing market will hold current price level, or even go up little bit during the first half of year 2010. Then the last half will be very interesting. Somebody is gonna get hurt. LOL

15   Done!   2009 Dec 23, 11:29am  

Obama bitch slaps somebody before April.

16   inflection point   2009 Dec 23, 12:16pm  

Camping.

The point is that there is a practical limit to how far anyone can extend a ponzy scheme. The ponzies are you and me. A ponzy scheme assumes there are willing victims. If printing money was a good solution don't you think Zimbabwe would be a world power?
My predictions for 2010:

1. More bailouts
2. More foreclosures.
3. Increased interest rates.
4. Increased taxes.

For Christmas I would like to see Bernanke, Geithner, Obama, and Congress resign.

17   Vicente   2009 Dec 23, 1:25pm  

I predict in 2010 the Federal Reserve (and fellow travelers) will continue jawboning inflation, in order to keep money of the peasants circulating as much as possible. Admitting possible deflation, or encouraging SAVINGS would be the death of their sort of banking, and we can't have that eh what? Enlisting the peasants in their own impoverishment, by frightening them with terrorists.....err inflation is all part of the plan.

18   ch_tah2   2009 Dec 23, 2:18pm  

Actually, Zimbabwe proves my point. There is nothing preventing a government from printing money. Zimbabwe isn't better off for doing it, but they did it. Why can't the US? We have a ton of debt, why not inflate? And for savers waiting to buy, it's gonna screw us.

19   Vicente   2009 Dec 23, 2:33pm  

I don't know if you've noticed, but Zimbabwe is not the holder of a global reserve currency among other differences. I think you've made my point for me. Fed has everyone so terrorized that inflation is INEVITABLE and that bread is going to be $10 a loaf next week and their condo will be a zillion dollars that they will SPEND SPEND SPEND now in order to avoid watching their dollars (theoretically) evaporating later. Please explain what you mean by "printing money" (resulting in assumedly Zimbabwe chaos overnight). Will we all get a $100K check from the Federal Reserve for Christmas?

My prediction stands. In 2008 I kept hearing 2009 will be the year inflation really kicks in, except it didn't. But the fear-mongers will keep repeating that trick, trying to shake all the money out of the peasant pockets that they can. It wasn't that long ago that the commodity bubble terrorized people to the point that there was a RUN ON RICE at all the big-box stores with people buying as many large bags as they could. I hope the hoarders have their rice in proper storage, and are going to eat all of it, otherwise they were just suckers that wasted their money on a fear that never materialized.

20   toothfairy   2009 Dec 23, 7:48pm  

No need for fear mongering actually the FED has been jawboning deflation to justify holding rates at 0% .
You can get a 10% return just by buying a rental property in Vegas. Prices could double and you'll still get a 5% return.
That's enough by itself to discourage people from saving.

21   anonymous   2009 Dec 24, 7:55am  

how can inflation seriously set in when there is so much unemployment? inflation will only set when people start to get paid more. I suggest you go try to ask for a rise ....
Commodities and house price are derived from affordability (% of income).
We need true economic recovery, ie full employment like in the 70's to drive inflation.
Zimbabwe inflation is something else entirely, its a crisis of confidence. Nobody believe the government will be able to repay its debt. ( well actually they already defaulted http://www.jubileeresearch.org/worldnews/africa/zimbabwe_stop_paying.htm )

22   inflection point   2009 Dec 24, 10:42am  

Camping,

That term your looking for is inflation. The law of supply and demand.

Bernanke's gamble is that the Fed can park trillions in the banks, buy mortgage back security's and US bonds. They are fighting a rear guard action to prevent the collapse of the housing market. Unfortunately, the problem is too big. Those naughty MBA's on wall street created a lot of debt.

The velocity of money has been low, not really moving in the economy (by design) which is what makes us different than Zimbabwe. He has been "successful" so far.

He will fail. Sooner or later people will figure out that the FED is the only buyer of government debt. The few other buyers will exit stage left.

Thats when the fun begins.

Just a note. I do not think any of this is really funny and I blame our government for letting it happen.

23   toothfairy   2009 Dec 25, 3:28am  

Vicente could you give an example of Bernanke "jawboning" inflation?

For the past 2 years he continues to denying it. Even to this day.
http://www.nytimes.com/2009/12/16/business/economy/16fed.html

I think you have it completely reversed. Inflation is the goal but they are not about to admit it.
The wealthy know this and are preparing for it. The poor are the ones who are in the dark about all of this and are about to get shafted once again.

24   Vicente   2009 Dec 25, 3:34am  

They are all over the place. Search for "Bernanke jawboning inflation". He only flips the other way when he's looking out for his butt against Senators who doubt his ability to prevent Zimbabwe. Those people want to imagine he's the captain of the Titanic who can prevent the iceberg collision. He has to convince you inflation is INEVITABLE but that they hold the ability to TIGHTLY CONTROL it. See what I'm saying? They NEED for inflation to happen, and for it to happen, they need to convince you to keep every dollar circulating as fast possible. Savings are bad. But they need to project the image they are brilliant managers who know exactly where every lever is and just how to use them.

From his FRB speech in 2008:

"Some indicators of longer-term inflation expectations have risen in recent months, which is a significant concern for the Federal Reserve. We will need to monitor that situation closely."

http://www.federalreserve.gov/newsevents/speech/bernanke20080604a.htm

Imagine it's 2015 and still no Zimbabwe. Hope people enjoy eating their hoarded rice, and stroking their gold bullion.

Suppose the growing ranks of unemployed continue to cause declines in dollars circulated way down here at the peasant level. Suppose people start draining their 401K to keep the lights on. A consumer-led economy with an increasingly stressed consumer, is not a recipe for meaningful inflation IMO.

25   toothfairy   2009 Dec 25, 3:49am  

I could be wrong but I dont think there's much need to tell talk people out of saving when interest rates on savings are near 0%. Hence stock market is skyrocketing.

I agree that they secretly do want inflation but it's not done through jawboning it's gonna be done by pretending that there's no risk so they can keep their foot on the money pedal.

26   ch_tah2   2009 Dec 26, 1:34am  

Why are you quoting a 2008 speech? We're about to enter 2010. Things have changed quite a bit since that speech. Everything he has been saying recently is that the Fed has to fight deflation - hence interest rates at 0-.25%. With such rates he's trying to create inflation - it's obvious.

27   Huntington Moneyworth III, Esq   2009 Dec 27, 3:48am  

Every person on the street will tell you that "the economy is bad" but these people are packing restaurants and stores. People are shopping for homes. People are spending money.

The economy has been eliminating unproductive sectors like the explosive growth of real estate agents and house flippers. Customer service has increased dramatically in retail jobs as older people have replaced stoner high school kids. People are working harder because they fear for their job. We finally have a working Windows product to power businesses.

The economy fixes itself. What we need is an educational stimulus to soak up some of the unemployed. Provide low interest loans and grants for people to go back to school and learn a new trade. Things will get better in 2010.

28   crash-olah   2009 Dec 27, 1:51pm  

inflection point says

My predictions for 2010:

1. More bailouts
2. More foreclosures.
3. Increased interest rates.
4. Increased taxes.

basically you said it in a nutshell. i agree with your thinking, maybe add 5. More Job Losses, 6. Further Decreased Home Values, 7. Gold and Silver soar, along with agriculture, 8. Short sales become the new way of selling houses, 9. we start to look more and more like Zimbabwe did when they printed money out of thin air...

i hope everyone has a happy and healthy 2010! :)

29   Austinhousingbubble   2009 Dec 27, 4:40pm  

Things will get better in 2010.

I'd like to agree, but I think you're being either excessively optimistic or just highly insular. Maybe your personal outlook for the coming year has been burnished by some positive developments of your own. For that matter, I am in good health, sound financial standing, debt free, Scotchgardedâ„¢, etc., but just because I'm sailing along jim dandy, doesn't mean I'm blind to the rafts whizzing by me going upstream on Shit Creek. A more realistic prognosis is that things WON'T get better, they'll just get worse less quickly. Kinda like a repeat of this year. The big picture doesn't look too cool, either. That's because the same unsound fiscal policies that helped get our collective tit in the wringer are still in place and as indelible as ever.

The Economy doesn't fix itself, by the way. That's Free Market jazz. The Economy as we know and loathe it is a highly manipulated, booby-trapped, trickle-up system of smoke and mirrors that has been gradually engineered over the decades by self-interested, vaguely misanthropic, highly Plutocratic larcenists. Oversimple, perhaps, but basically true.

So, six predictions for 2010, fresh from my backside:

1. Debt relief repackaged in such a way that suggests something other than relief or continued stimulus, which would conflict with reports of a strengthening recovery. Think mortgage deferment programs and extensions on the 8K tax rebate plan -- possibly making it or some variation of it permanent.

2. Interest rates will continue to be suppressed downward. If they do inch up at some point by the middle of next year, there will likely be new loans introduced like the 50 year mortgage, or community service/vital organ/best looking daughter in lieu of down payment. Anything to perpetuate debt bias, the *real* engine of our economy.

3. Job numbers will appear better, (or less bad), but the tragedy will continue to play itself out in salaries and in the form of underemployment. Again, packaging.

4. House prices will continue to correct on paper, but asking prices will only barely flinch for most of the year.

5. The savings rate and household debt numbers will creep back down/up, respectively. In fact, they already are. The savings rate strengthened this year and household debt was down, thanks in large part to credit card defaults and foreclosed owners living in rent free limbo while the banks drag their feet.

6. Airstream trailers setup on five or six acres of ranchland will start to take off. Think Dune Buggies and Manson Girls without all the maiming. Sounds alright to me. Better than any of the lame Garage Mahals I see nerds drooling over.

http://www.airstream.com/products/index.html

Now, back to the Glad Game...

30   anonymous   2009 Dec 28, 3:36am  

Home prices will drop 10-15% this year. I did my own research going back to the 30's.
Ecomony/Housing Crash spiritnewsdaily.com

31   zzyzzx   2009 Dec 28, 3:55am  

I am expecting 2010 to be, for the most part a continuation of 2009. In other words, even higher unemployment and no real economic recovery.

32   Austinhousingbubble   2009 Dec 28, 9:41am  

I am expecting 2010 to be, for the most part a continuation of 2009. In other words, even higher unemployment and no real economic recovery.

You got it. I am guessing that a better picture of things to come for the next decade or two will start to emerge as we head into 2012. Everyone's talking inflation, but we've already been experiencing that for at least the last six years where commodities/consumer goods are concerned.

I also predict more high level heists and bank robberies in the coming years.

33   inflection point   2009 Dec 28, 12:37pm  

I should also add more terrorist attempts because it pretty clear homeland security and the airport screeners are not going to stop anything.

Perhaps they should spend less time with elderly folk and women with babies.

34   Hysteresis   2009 Dec 28, 1:58pm  

From CalculatedRisk:
---------------------------------------------------------------------------------------------------------
http://www.calculatedriskblog.com/2009/12/government-housing-support-update.html
As everyone knows there has been a massive government effort to support house prices.
# Housing Tax Credit Ends
# Federal Reserve MBS Purchase Program: This is scheduled to end March 31, 2010
# Treasury MBS Purchase Program: This program will end Dec 31, 2009
# HAMP Trial Programs Extended: The Treasury has extended any expiring trial modification program until at least Jan 31, 2010
# Support for Fannie and Freddie: Treasury has uncapped the support for Fannie and Freddie for the next three years.
# Fannie / Freddie Low-Cost Refinancing program. This is the program that allows homeowners with Fannie and Freddie mortgages to refinance loans up to 125 percent LTV. I believe this program expires June 10, 2010.
# FHA Loose Lending Standards: In his Dec 2nd testimony to Congress, HUD Secretary Donovan said the FHA would propose tighter lending standards by the end of January 2010.
# Various Holiday Foreclosure Moratoria: Fannie, Freddie and most of the large banks routinely suspend foreclosure activity over the holidays.
---------------------------------------------------------------------------------------------------------

Currently the real estate market is heavily supported by government intervention.
In 2010, many of these programs will end.

As a result house prices will drop.
I believe the effects will be felt nationally, and significantly in 2010 and beyond.
More than a 5% drop but potentially, and I think more likely, a larger median price drop.

We are nowhere near a normal real estate market. at least in the SF bay area.
When more than 2/3 of sales are foreclosures and distressed property there is no reason for prices to increase, yet in some areas this is exactly what happened.

Once the government has scaled back it's housing stimulus we should slowly see prices adjust to rational levels in the bay area. Prices are still too high. I make good a good salary and I can only afford a crapshack in a bad neighborhood(without over extending myself on payments). No way that's a stable market.

35   smrr   2009 Dec 28, 2:46pm  

thomas.wong89 says

Blue Swan says

I have been forecasting a Jobs Boom in technology at the 100K range. There will be numerous opportunities for hard hit technical workers who will finally get the best of management.

Here is what is happening with out of work Accounting & Finance /Tech workers…

Former CFOs are getting VP/Controller jobs with Paycut

Former Controllers are getting Accounting Manager jobs with Paycut

Former Accounting Managers are getting Sr Accounting jobs with Paycut

Former Sr and Staff Accountants are perm unemployed because they cant get jobs.

Anyone coming out of Unversity with Accounting/Finance Degree will be really out luck!
And many who have jobs are seeing paycuts 5-10% pulling away below $100K !

Consulting jobs are also trimmed and contracts are 30% off price.
This is happening! ask any headhunter on what jobs are open and candidates are being hired.

And its happening with Engineers and Marketing professionals as well. Salaries are being cut

along with no of openings.

All true. I offer consultants 50% less than they were earning last year. Some balk. Some end up with jobs working for me. Dozens of other firms contact me looking to place their consultants with me. And it isn't like I have an infinite number of jobs opening. I have filled maybe 10 roles on projects in the last quarter. A good quarter, but in the old normal I wouldn't be getting this sort of attention from vendors & independents.

36   4X   2009 Dec 28, 2:52pm  

Troy says

E-man says


Home prices will increase 5% compared to 2009.

This is going to depend on prevailing interest rates. If they stay under 5%, perhaps. If not, I fail to see how this is going to be possible, unless other “affordability” measures are taken like outright payment assistance.

Yeah E-Man, the people cannot afford 400k homes that are being sold on the coasts but are breaking their necks to buy because of emotional attachment will continue to buy....however, there are still a lot of underemployed people that wont buy into the 8K tax credit gimmicks.

I dont agree that prices will rise 5%...that means in 10 years home prices will go back to 2006 prices...your thoughts?

37   4X   2009 Dec 28, 2:58pm  

ZippyDDoodah says

Bubbles never deflate in a straight line. The current bounce in home prices in some markets is almost entirely the result of artificial lowering of interest rates coupled with govt spending through tax credits and loose credit money with HUD. E-man makes an interesting prediction, but I’ll take the other side.. home prices will drop 10% average nationwide in 2010 as compared to 2009 even with massive govt deficit spending to prop it up. The S&P will hit a euphoric 1350 on the “hope” that things are turning around before sliding below 800

I predict the same...

Elevator go UP
Elevator go DOWN
Elevator go UP
Elevator go DOWN
Elevator go UP
Elevator go DOWN

The bubble will be up and down for the next 5 seasons of football then it will stabilize just in time for me to buy...or it could go up, up, up and I will continue renting in the same areas for 1/3 the cost.

ROTF

38   4X   2009 Dec 28, 3:04pm  

inflection point says

Camping.
The point is that there is a practical limit to how far anyone can extend a ponzy scheme. The ponzies are you and me. A ponzy scheme assumes there are willing victims. If printing money was a good solution don’t you think Zimbabwe would be a world power?
My predictions for 2010:
1. More bailouts
2. More foreclosures.
3. Increased interest rates.
4. Increased taxes.
For Christmas I would like to see Bernanke, Geithner, Obama, and Congress resign.

What, you want more Bush in your life?...If I remember it was his continuance of Bush Sr., Clinton policies that brought us to this point. Lets judge Obama in 4 years when the facts are in.

SMH

39   inflection point   2009 Dec 29, 12:49pm  

4X,

I do not have any respect for either Bush or Clinton.

Obama has owned this since January. No one said he would have it easy or he did not start off with a handicap. His honeymoon is over.

There are already many facts in. Perhaps you could see them if there was a little more transparency in Government. I am sure that is coming any day now.

40   Greg Fielding   2009 Dec 30, 1:59am  

Home prices on 2010 will depend on the Government's ability to keep the public call and prevent mass walk-aways.

If people think there's a chance we're near bottom, they may accept a mod and try and stick it out. If they start feeling like everyone else is bailing, then they will too.
Then, the downward spiral begins again.

http://immoralhazard.housingstorm.com/2009/12/29/will-we-keep-our-faith-in-2010/

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