Happy New Year (or is it)
With so many experienced Real Estate Investors
and other business people on these forums I
wonder what are your predictions on the future
Real Estate Market for 2009?
In general and on your area of expertise?
all the bank bailouts have done nothing to relieve people over their heads on mortgages. foreclosures will continue to increase over the next 36 months as all the “option ARM’s” begin to reset and people who have been making interest-only payments are under water on value, cannot refinance, and cannot afford the new payments.
right behind the subprime mortgage crisis is the subprime credit card crisis and the subprime auto loan crisis. Even I, with good credit, have seen my credit card limits cut drastically. Banks realize the problem and are attempting to reduce bad debt.
Russia will flex its muscle with gas supplies to Europe. Did this last week, in fact, with Ukraine.
As the planet continues to cool, and congress enacts a useless energy rationing carbon tax, energy prices will rise, making the financial problems worse.
Iran will continue to defy the UN and develop nukes. China and Russia, who need the cash, will supply the technology.
Israel will bomb Iran in “preemptive self defense.”
Obama will abandon Israel, the US’s only ally in the region, because we no longer can face down the Russians and Chinese.
China will become the world economic engine.
The US will give up more sovreignty to the UN.
Tax increases on the rich 10% (75% of whom happen to be small business owners responsible for 70% of non-government jobs and 75% of non-farm gross domestic production in this country) will be passed on by small business owners and prices will rise at 5% annually, in spite of the recession.
As tax rates rise, tax revenues to the treasury will fall as incomes shrink. Retirement plans and pensions will be adversely affected by increased capital gains taxes
Windfall profits taxes will be levied on the oil companies. Much of this will be passed on to consumers in the form of higher gas prices. Less profits means less cash available for domestic exploration; oil imports will increase. Less profits means less cash available to pay dividends to shareholders; investors will transfer to other, more profitable investments leaving oil companies struggling to compete in a global market.
Because many small business owners will quit or shrink rather than no longer being compensated for the risk they take to be in business, unemployment will rise to 12%. the US no longer has a strong manufacturing base and now relies on discretionary “service” businesses.
We will have a national healthcare system that will make social security look puny by comparison. Citizens will no longer have a choice of healthcare, but will be required to participate in the Government system. It will be racked by beauracratic waste and mis-management. Demand for “free” services will drive costs and wait times higher, resulting in rationing of health care. It’s the only way to supress demand for “free” services. You’ll die waiting 6 months for your heart surgery.
Welfare programs will increase. Social security and medicare will remain underfunded. This is a national “ponzi scheme” but Madoff will go to prison while congress gets a raise. Ha.
Since taxes can’t rise on the lower and middle classes, and tax revenues shrink from the upper class, no “fix” is tolerable. Private 401(k) and retirement plans will be absorbed into social security in exchange for higher payouts at retirement. This will stabilize social security but will be the end of private retirement accounts. We will all be dependent on the government for our retirement finances.
guns with more than six bullets will be banned.
well, that goes beyond 2009, but you will need a long-term plan to survive and thrive. good luck.
EXCELLENT ANALYSIS Mark! I couldn’t agree more.
Mike
- Neither the Chicago Cubs or the White Sox will reach and win the World Series
- Lenders will be forced to open the faucets on mortgage money and relax their standards
- I’m going to win at least $10k in Vegas in Sept
- REO lenders will quit throwing up so many hurdles to getting deals presented and accepted
Marc I agree with some of what you said
and I enjoyed reading your insightful post
Thanks :cool
Gee, I guess we should all move to Canada.
I have to disagree with you on one point, I have no issue with universal health care if it allows one more child to grow up healthy and happy. That said, if that’s what it takes, I’m all for it. Besides it’ll eventually break down even more if left to te private sector since most insurance companies are publicly traded and in the biz of making money, not saving lives or keeping people healthy thru preventative medicine.
2009 is going to be a great year. I believe that for the most part people are good and will do what’s best to make life better for everyone. Let’s stay positive and help each other as we navigate our way thru this challenge that is in front of us.
My little corner of the US will continue to do well. There was no bubble here so there is no crash. Foreclosures in this state are well below others.
Real estate sales numbers are down, but those that sold are up about 1%/month. Still undervalued by national numbers.
Last year at this time (our low time) we had 11 vacancies, out of 45 furnished rentals. This year we had 8, 3 rented this morning. 5 to go, with 3 snowbirds already booking for Feb-March. The temperature today was 72 degrees, I had to roll the car windows down. But it is going to be colder tomorrow.
My furnished rental business will continue to do well, but five hotel suite hotels are in the building/planning stage. I will have to learn what to do with competition. Right now I am thinking “Boutique Furnished Cottages”, why not? They do it in Manhattan, I stayed in one.
Maybe a sign of the deteriorating economy, crime appears to be way up in our town. We have installed 6 burglar alarms in the past month, and we are now putting in gun safes ($19.95 thank you, WalMart). I expect more break-ins in 2009.
Like hassansr, I am hoping for a national health system. My staff talks about their medical bills constantly. As a small business owner there is no way I can give them health insurance. I will vote for anyone, anytime who will give us health care that is affordable. Take the billions out of Iraq and use it for healthcare insurance. I’m hoping for us to join the Europeans on this in 2009.
I am paying down debt and hunkering down in case my tenants can no longer afford my rates. More and more people are asking for discounts. But we still have not ever had an eviction for non-payment.
I also predict that more and more tenants will ask for large flat-screen TV’s! It is already happening! Is everyone getting hooked on electronic crack? On-screen games?
It is going to be an interesting year.
Furnishedowner
I know our Chamber of Commerce Has a deal where they have negotiated a price with Health Insurance companies to get the low ‘big shop’ prices for anyone in the Chamber. You might investigate your CC to see if they have something similar.
Taxation
Obama will try to offer tax breaks (hear: free money) to the lower 50% of American households. The problem with the “eat the rich” policies is that there is not enough money in the households of America’s upper middle class and upper class. Clinton found this out and realized that the only place to take new tax revenue was the middle class. Big business is in for a bad four years as taxes on corporations (especially international corporations) soar. The only incident that will protect big business is the existence of a labor union money trail to the pockets of politicians, which, of course, our fine legislators do not want to sever.
Government
In the name of stimulus, infrastructure and “renewable energy” policies are about to explode, and, contrary to the notion of change, we will spend like teenage girls in a shoe store, except we will exhibit less restraint and thoughtful analysis. We are about to mix unprecedented debt with mismanaged money, and the results will be comical and sad. People with innovation, vision, and a desirable plan, like Boone T. Pickens will be ignored by our government and our citizens.
Debt
The government recently showed a philosophical framework that deficits don’t matter. Contrary to the notion of change, deficits and spending will take a back seat to our recent “ready, fire, aim.” protocol for saving America. Of course, they could never get away with the continued lack of accountability and oversight, unless, of course, ABC, NBC, CBS, Time, Newsweek The New York Times, The Washington Post (and the like) continue cheerleading the economic disasters like suicidal Nostradamus wannabes. Once our country’s citizens are sufficiently brainwashed, they will reach into our pockets, our grandchildren’s pockets and our industries and steal money without a peep of protest.
The Federal Reserve
The most interesting thing about our recent economic state is that we have increased the money supply exponentially, and have not seen a sniff of inflation. Sure, the Consumer Price Index and the Producer Price Index have gone up (well, down recently), and we saw inflationary activity in the housing market from 2000-2006, but it was immediately followed by deflationary movement. What the hell? We should be seeing a rerun of late 1920’s Germany style hyperinflation, instead we are seeing late 1990’s Japanese recession. If the money supply ever gains velocity for any reason, we will see the prime interest rate soar to the high teens again. Until then, the Fed will stretch the legs of the printing press and see how fast she can run. We can’t save America and the earth with the Ponzi-style savings in our Treasury.
Heath care
To quote a fellow poster: I’ve seen this movie before and I know how it ends. “Affordable, accessible health care for every American” roughly translates into “we cannot afford to pay doctors and nurses, so we wont.” Hospitals are about to panic hard. Bond returns for health care infrastructure will dry up with lower revenues paid to the hospitals, and hospitals will hoard cash, just like banks and insurance companies. I sure hope you folks exercise, eat right, and don’t have vices like smoking. Our health care institutions are about to lose their ability to help you.
Housing
In the 1930’s, the government purposefully destroyed food to try to increase prices. Never mind that half of the nation was starving. The government needed the penny loafer wearing, mahogany table sitting cretins to save its taxpayers.
350 billion dollars into the Troubled Assets Relief Program, Peter Kraus got 25 million dollars for the indispensable service he provided to Merrill Lynch for his 3 months of service, but how many homeowners have been helped? How many mortgages are no longer “troubled assets?”
The main fly in the ointment of mortgage financing in the early 2000’s was the 28/2’s. Two years of teaser rates, and 28 years of paying the money back. Remember that the credit markets did not freeze until August of 2007. Since our attempts to salvage Mortgage Backed Securities has been a pathetic, impotent waste of time, we will continue to see foreclosure activity until at least August of 2009. Then, we will have all of the 5/1 ARMs flooding our markets with foreclosures until 2012.
Until the housing market plateaus and rebounds (we need only resume the trend of the last 80 years), we will see no improvement in the overall economy.
Your reason to be on this site
Housing is a durable asset. With properly cash flowing real estate investments, you may shelter yourself from the Wall Street casino, the Federal Reserve blunders, and the failed policies of socialism. People will always need a place to live and do business, and by placing yourself in the middle, you are giving yourself at least a chance for weatlth, passive income and retirement.
Lets try to stay positive in this. Eagles by 3 over Steelers in Superbowl. The kicker is mvp.
I predict - no, I know for a fact - that I will make more money in 2009 than I have ever made in my life. I am pouring money into the stock market and real estate…and will do so throughout 2009…life is good as I have cash and cashflow.
Assets are cheap now. As they say - buy cheap, and sell high.
Wow! both my picks today won! anybody got the numbers for next week?
mine: Philly 12, arizona 10
Pitts 31, Baltimore 21
Eagles winning the Super Bowl - Well they gotta beat
the Cards to get there but I say why not.
EAGLES 2009 SuperBowl Champs! :beer
Cinderella takes it all. Cards SB Champs '09. :biggrin
We should beat the Cards Sunday - AGAIN :beer
Not feeling so gloomy here. The Bush negative brainwashing years and the baby-boom selfish generation have been very affecting on many Americans. The challenges are daunting but just because this government effectively halted innovation and embraced corruption through fear does not mean our best years are behind us. We still have the brightest people and most free-flowing ideas in the WORLD! Yes, there are worst case scenarios that can play out and I agree with Funder that real estate is a great hedge for those times. I’m excitedly looking forward to the real estate business in SFV to offer me opportunities.
I think 2009 will be a year that great ideas are unleashed and optimism returns to our country. I’m not a PollyAnna but really believe great opportunities lie ahead.
A black man will become our President Tuesday. This proves that it is possible for humans overcome huge divisions and live like people who love our children and want better for THEM not just us.
hassansr
Just for the sake of clarity, the road to perfection is paved with problems. It’s better to be realistic than to limit one’s focus to the positive.
The more vigilant we are about corruption and ineptitude, the better things will get.
Go Cards!
I hope our forefather’s wisdom will prevail and that Obama’s proposed programs will not get through Congress.
I don’t subscribe to the “I hope he succeeds” pablum. A president does not succeed. He leads the country. And our legislature is supposed to be made up of statesmen. Instead, we a legislature made up of children who think if you are a member of the “other party” (whichever party that is) you have cooties. The other big problem. The media is so strong in this country, no one thinks for themselves anymore. So, how does a president succeed in making the country happy?
Vicky,
I usally don’t like to think that hard on Sunday, but your short direct post made me
do just that. Think!
Everyone at www.ReiClub.com should read this and think about it!
Good Job! :biggrin