Here is our big giant list of real estate predictions for 2009.
I scoured the Internet, collecting these predictions from large numbers of reliable blogs and articles.
There is a lot of bad information out there that we need to be wary of, but basically I think these real estate predictions are practical and will probably happen.
1. Less, With More. Single-family homebuilders are predicting the continued movement toward smaller homes, with many buyers opting for less square footage as a means of saving more, said Jim Chittaro, chief financial officer for Naperville-based J. Lawrence Homes.
2. Wave of commercial bankruptcies will bring down retailers, malls and commercial real estate companies
Confidence in prediction: 80%
This prediction is already well underway, so perhaps it’s not a fair prediction to include in this list, but I did publicly predict this in early October, 2008, in my Financial Preparedness and Health Safety audio seminar, which took place long before the commercial bankruptcies started to take place ( http://www.truthpublishing.com/Health_R…).
For 2009, I predict the post-Christmas economy will see accelerating bankruptcies of even more retailers and shopping malls, and many commercial real estate holders will go belly up, causing a liquidity crisis in the commercial markets just like we say in the private homes real estate market.
The only retailers immune to this will be the low-cost, "value" retailers like Wal-Mart and Costco.
3. At least three U.S. cities and states will announce their bankruptcy
Confidence in prediction: 90%
The U.S. financial crisis isn’t just national, it’s also local. (Or should I say loco?) Before the end of 2009, I predict at least three U.S. cities or states will declare bankruptcy (or the equivalent of bankruptcy).
California is already in a huge fiscal crisis, and several major U.S. cities have asked for bailout funds to continue their operations. The problem, you see, is that city and state governments all ramped up their spending in the midst of the lucrative housing bubble, during which record property taxes were flowing into their coffers.
But with the housing bubble implosion came the sudden loss of property tax revenues (and sales tax revenues on property sales, in some states). And that has landed these cities and states in a financial situation from which there is no escape other than reduced spending or higher taxes.
4. TheInternet Becomes More Effective Than Agents in Helping Buyers Find Homes: According to the 2008 NAR Profile of Home Buyers and Sellers, 32% of buyers in 2008 said they first learned of the home they purchased by seeing it on the Internet, up from 29% in 2007, and from just 2% in 1997. In 2008, 34% of buyers said that they first learned of the home they purchased through a real estate agent, compared with 34% in 2007 and 50% in 1997. Prediction: In 2009 – for the first time — more buyers will find the home they purchase by seeing it first on the Internet rather than learning of it from a real estate agent.
5. Real Estate Agents & Brokers Numbers Continue to Decline: In 2000, there were 756,000 members of the National Association of Realtors. Its membership grew as the housing market gained steam earlier this decade, peaking at 1.37 million members in October 2006. Its membership stood at 1.242 million in October 2008. Prediction: As the housing market continues to cool and the Internet makes it easier for people to sell and buy homes, there will be even fewer real estate agents & brokers in 20
6. We are going to see more foreclosures, but not for the reasons above. Our next string of foreclosures will be from people loosing their jobs. This type of foreclosure scenario is normal and was part of our economy even in a healthy environment. Foreclosure filings are the big misleading indicator because they are grossly misunderstood. People can’t get their lenders attention for mortgage modification unless they are late on their mortgage. When this happens, the bank delivers a Notice of Trustees Sale to begin the foreclosure process. Banks are now modifying mortgages for those people and so the homes thought to be going to foreclosure never make it that far because the owner now stays in the property. The result is fewer foreclosures as a result of upside down homeowners.
7.Growth and planned expansion will be slowed almost to a crawl and even perhaps stopping altogether unless the local government can figure out a way to raise the money to pay for all the new roadways and projects it had already begun. They are discussing all kinds of ways to tax you and I that live here to get it all paid for.
From Grant Hammond – Nashville Homes
8. The rate of home sales will increase dramatically by summer of 2009, but not make a full recovery until 2010.
Several large developers will unexpectedly go bankrupt.
9. One large regional bank and 2-4 local banks will cease to do business in Middle Tennessee.
10. The value of commercial real estate, especially retail space, will take a massive beating worse than the S&L crisis in the 1980’s.
In 2010 parts of Nashville (Brentwood, Green Hills, Forest Hills, Oak Hill, and a few others) will experience extreme shortages in both land and homes. Prices will temporarily skyrocket and quite a few folks will make handsome profits on property they acquired during very early 2009
11.Don’t go there, seriously. Don’t build in 2009.
12. Commercial Real Estate
This one’s dicey because as the commercial market is now deteriorating, as vacancy rates are rising and as asking rents are moderating and in some places declining, gaps in cash flows—that is how much money the property is producing against what the debt service is—is widening. That’s making it harder and harder for many commercial real estate owners to make the mortgage payments
13. CMBS Market
Fear is driving the CMBS market at the end of 2008 and most think that will accelerate into 2009. The big fear used to be that commercial borrowers would have trouble refinancing their loans in 2009-2010 when they come due, thanks to the credit crunch, but that fear is now on the back burner, behind the current fear of valuations on these securities. Folks aren’t buying them, and the spreads have widened by something around 300 percent (no joke). I’d watch this one carefully, but remember that the CMBS market is nowhere near as large as the residential MBS market. So, dare I say, chill?
About.com Guide to Home Buying / Selling
14.Buyers and sellers will be more and more tech savvy, relying on tools like video, webcasts, and mobile search. Consumers and practitioners will benefit from being ahead of the curve.
15.The recession will end and buyers will regain confidence in the market.
16. The Obama administration will act on its plan to crack down on abusive lending practices.
17. Real Estate Competition Will Shrink
18. Sellers Will Shun Loan Modification Programs in Favor of Short Sales
19. Banks Will Pursue Foreclosure Options Over Loan Modifications -foreclosure will be easier on banks than trying to work with distressed owners.
20. Rental Rates Will Increase as Demand Increases -previous homeowners will leave their homes and go back into the rental market as tenants
Tax Breaks for Home Selling Will be Revised – it’s going to get ugly.
Mostly, a lot of our experts believe commercial real estate will see a very difficult year.
2009 will begin the turn-around for residential, but the stimulus packaging being poured into the markets will take time. (Remember it took too much time to steer the Titanic away from the iceberg)
My feeling is the Federal Reserve’s lowering of the main interest rate (what is loaned to the banks) will not really kick in for a while. I’m not sure the banks will actually let the money loose anyway, or that average borrowers will want the money even if they can get their hands on it. But eventually things will pick up again. It moves in cycles.
Fear has a lot to do with that. As Stew Keene put it, people are afraid of losing their jobs. That will influence real estate.
However, I still feel these are also times when fortunes can be made.
Of course, fortunes can be lost also, but I think most of that fall-out has already happened during 2008.
Good luck and keep thinking and working positively.