patrick.net

Jan 14, 2011.

SF ace says

It’s going to be scary for the renters that will be facing multi-years of (close to double digit) rent escalation.

- Crash in the stock market
- Interest rate goes up
- Another struggling year for housing market
- World starting to leave China.

I predict the price of the house(s) I want to buy will [continue to] fall faster this year than my annual rent, including any rent increase. Eg:

Price Reduced: 11/04/10 -- $724,000 to $699,000

I predict CA voters will vote down any tax rises in the June special election, causing a massive fiscal clusterf--- and something resembling a bona-fide financial crisis for the state.

I predict China will not crash.

I predict the $600B of new Fed money injections will have a reasonably stimulative effect on the economy, for $600B in hot money can be multiplied 100X if it gets into the right hands.

I predict this stimulative effect will prompt general price inflation -- eg $4 gas, but wage inflation will not come along for the ride. This is more an idée fixe with me than a valid empirically-supported belief, but we'll see anyway.

I predict this will also result in the 30 year mortgage rate staying in the 5% range and not heading any lower.

I predict the banks -- BAC & WFC -- are not out of the woods.

- Gas prices going up strangling the society
- High unemployment rate with more jobs going overseas.
- Tech industry starting to feel the pinch when jobs go more and more to India.
- Stock market will be insanely high.
- WikiLeaks will release some BofA information totally crushing the bank and their reputation making JPMorganChase the king.
- We'll get another bubble building somewhere subsidized by stupid government action leading this nation to its last and final crash before our system collapses under its own fraud and greed leading us to become a meaningless 2nd rate nation 5 years down the line.

I'm basing this on business cycles and the fact that crashes will become more frequent.

By the end of 2011...

- Gold $1600-1800 Silver $35-40
- %10 fall in real estate
- Flat rents
- Unemployment in the 9-10% range
- Dow 10,000
- Another banking industry bailout
- Mortgage rates on the rise

1) I agree with Troy on CA voters rejecting any tax increases. Tough times still ahead for CA and that is not going to help housing and economy in general for CA.
2) My bookmarked homes are dropping in prices like a rock. Further home price decline is on the way.
3) Rents will be flat(it has been for me) so SF Ace will be proven wrong at the start of 2012.
4) Agree with joshuatrio - mortgage rate will increase.
5) There will be hardly and salary increases.
6) I am somewhat skeptical about TARP II.