Thread: Forecast On The Real Estate Markets: 2009-2011

Last year was brutal for real estate markets in Florida, California and Arizona. This year won't be much better.

America's Weakest Housing Markets

Reported out of Forbes News Service

January 9, 2009-- In Palm Bay, Florida, a 563,000-person metro area on the central Florida coast, it's not just lush palm trees dotting the landscape--forecloure signs are all over. Partly to blame? The area's median home sale price has fallen by half since 2006, from $238,000 to $110,000, according to Trulia.com, an online real estate data provider. This has left many homeowners owing more on their mortgages than their homes are worth.

As a result, almost 1,800 homes are in the process of being repossessed by lenders--twice as many houses as were sold in the six months between May and November.

And more foreclosures are inevitable as homeowners cut their losses and walk away from their mortgages. There are already so many empty homes that the city passed an ordinance two months ago requiring lenders to identify which abandoned properties they owned. Farther south in Miami, it's a similar story. Real estate data estimates that 96% of Miami's houses are losing value. Median sales prices were 22% lower than last year in the third quarter.

Out West, in Las Vegas, a crushing 98% of homes are losing value and foreclosures account for 45% of all transactions. All three top a list of the country's top 25 worst housing markets in 2009. Provo, Utah, and Fort Lauderdale, Fla., round out the top five.


Behind the Numbers
A list was compiled of the country's real estate markets that are furthest from recovery. Moody's looked at the country's Census-defined metro areas--including metropolitan and micropolitan statistical areas--with populations over 500,000 and prepared forecasts through 2011. They then compared them with prices in the second quarter of 2008, the latest figures available, to calculate how far prices will likely fall before reaching bottom.

In Palm Bay, real estate values are expected to fall another 41.4% before bottoming late next year. Miami could be in for a similar decline, and Fort Lauderdale is forecast to drop another 30%. There are more familiar names on the worst-off list: Los Angeles and Phoenix where foreclosure signs and half-built exurbs serve as constant reminders of the real estate frenzy that lead to this crisis.

In Las Vegas, where speculation moved out of the casinos and into the property market, prices have another 43% to lose, according to Moody's. In Phoenix, too many houses and too much speculation sent property prices into a tailspin two years ago. But the bottom may be in sight late this year--after another 31% drop.

Tucson, Ariz., also looks like it's close to flattening out--after an estimated 33% fall by the end of next year. For other towns on our list, there's still plenty of time to get 'em while they're cold. Most of these troubled markets, including Santa Ana, Calif., Orlando, Fla., and Jacksonville, Fla.; won't even start to recover until next year or the year after.

That's even though real estate prices, on average, across the country should hit bottom by the end of this year, according to Moody's forecasts, after an average 15% drop. It's not just the cities already facing massive foreclosures that are poised to further stumble; this year the gloom is spreading to the country's second-home markets.

Many of these places were doing well until recently as retiring boomers and investors bought property where they played. But the market for second homes followed Wall Street into a deep dive last year. Because the downturn hit many of these markets late, the worst is yet to come.

Just over a year ago, for example, property prices in Salt Lake City were still rising, even though they were falling just about everywhere else. By the third quarter of 2007, the median home sold for $247,000 versus $203,000 in 2006. Prices haven't fallen much yet; the median price in late 2008 was $230,000, according to the National Association of Realtors.

But Salt Lake City, which is surrounded by some of the best ski resorts in the West, is just starting to feel the effects of the drop-off in second-home buying. Prices are set to fall 29% over the next two years, according to Moody's forecasts. Provo, Utah, and Boise City, Idaho, are also headed down with the drop in nearby ski home sales, says Mark Zandi, chief economist for Moody's Economy.com.

Honolulu hurt by the drop in buyers from Asia and California, is beginning a long and slow descent, with real estate prices forecast to drop 31% before hitting bottom in 2011.

There is another region where the worst may be to come: New York City area metros. Housing values in Newark, N.J., could fall 26%. Likewise, Edison, N.J., is also among the mid-sized metro areas expected to see the steepest drops this year. But the worst could be over by the end of 2009 for New York's satellite cities.

Manhattan, now at the epicenter of the financial crisis, is noticeably absent from the top 25 weakest markets list. So far, the city has been isolated from the popping bubbles in the rest of the country. Property prices were rising in Manhattan until early last year. Zandi believes Manhattan could be spared a steep drop. He expects a fall of around 20%. Even if big bankers lose their bonuses, "Manhattan is still supported by international demand," he says.

That prediction may prove conservative. The value of new contracts signed have already dipped 15% to 20% in the fourth quarter, according to a Beige Book report from the U.S. Federal Reserve last month. The report said much of the activity came from "desperate sellers," so it may not be a fair gauge of where prices will go from here. Of course, that depends on how many more sellers become desperate.

This is pretty interesting. So how long have you been studying this? And you must use other indicators other than astrology?

Originally Posted by hotrealtyleads.org

This is pretty interesting. So how long have you been studying this? And you must use other indicators other than astrology?

The best indicators are astronmoic transits. They are always on time, and influence the entire globe. I do not rely on another other "indicators" as many of these are reactive, not proactive, as reading astrological configurations are. Because it is a priori-based forecasting science, with legacy data stretching back centuries, we have access to how Solar, lunar and planetary configurations have impacted the world before; especially economically.

I continue to state that we are in very challenging times, and many people have not yet realized just how challenging things will become ~ especially in the decade of the 2010s. I urge all people, including realtors, to begin to make serious adjustments now, and to continue this through this year, and next, so they will be able to survive the most challenging years of the nexr decade.

There are ways to get through this, however, it will require that realtors get "real" and effectively communicate to sellers that the "good times" are long gone, and will not return for at least 10 years. This is the truth, and there is no way to get around it.

I continue to be amazed at the majority of sellers whose home values are falling like a rock, and who continue to believe they will get a good price for their homes. Most buyers know that they have to wait until the values of property bottoms out so they will not lose any eqiuty in their new-purchased properties. Sellers have little options because they cannot file for bankruptcy under the new 2005 "reform" and rid themselves of credit card debt, which would have freed up money so they could pay their mortgages.

This new 2005 bankruptcy law effectively blocks this. It forces all homeowners to continue paying credit debt while at the same time blocking them from paying their mortgages, which, by the way, many homeowners were doing by using their home's equity to raise cash. This is why the foreclosure rates have skyrocketed.

All the while, credit remains frozen, the banks are not lending, property values are dropping at the same time that resets are kicking in which are higher than the property's diminishing values. Inventories (commercial & residential) continue to flood the market, and the unemlployment rates are much higher than stated (it's about 12% and rising.) So, It is a very deadly cycle, and nothing has been done yet to stop it.

The economic madness, especially in the housing and commercial real estate markets, and the financial industry is leading this country into a deep black hole. There is no easy way out except by calling it quits when it comes to debt, and allowing homeowners to write that debt off by repealing the 2005 Bankruptcy "Reform" Law which is behind much of this mess in the first place.

The astronomic configurations for this year, 2010, and into 2011, and beyond, to about 2017, clearly show that we are entering unprecedented times. We have a $10.5 trillion national debt; about $53 trillion of unfunded liabilities; a $60 billion trade deficit; an annual budget deficit that will exceed $1 trillion next year; a crumbling infrastructure with 156,000 structurally deficient bridges; almost total dependence on foreign oil; an educational system that is failing miserably and a housing market that is in major decline.

These are not good signs.

Until the bleeding from the housing crisis is stopped, we are going to all see even worse carnage I'm afraid, until some real leadership is undertaken to stop the rampant corruption and sickness in the financial industry that led the entire country down this very slippery slope.

Very interesting. I hope people would not discount your post simply because of how you came to your viewpoint. I cannot say i beleive in astrology, but am always ready to hear someone else's views.

I hope it gets better, and much sooner than what you have posted but you could be right. What other insights to world conditions do you see in the next several years?

I have to say, so far 2009 has been VERY strong! My web traffic is up, clients 6 days a week. I'm very, very grateful.

Originally Posted by markbrian

Very interesting. I hope people would not discount your post simply because of how you came to your viewpoint. I cannot say i beleive in astrology, but am always ready to hear someone else's views.

I hope it gets better, and much sooner than what you have posted but you could be right. What other insights to world conditions do you see in the next several years?

Thanks. All I can say is that Astrology believes in you. All of us living in the natural world cannot escape the influences of the planets, and stars, as we cannot escape the influences of the Sun, or our Moon. Without the revolution of the celestial bodies, there would be no time, nor weather, for all things are in motion.

As for world conditions: global transits indicate we are just now entering a new, and very challenging era. Most people have already seen this with the election of Barack Obama to the White House, which is a sign of the huge generational transition the world has entered. This will continue into the 2010s, as we make a transition from the legacy of the 20th century into the new era of the 21st century.

The mass psychology of the world is influenced to a great extent by the planetary configurations relative to the Earth. Mundane astrologers monitor the transits of the outer planets and note past configurations as they repeat themselves in new forms, and we collect this data into something called the Cyclic Index (CI) which helps us to forecast world influences and global trends into the future.

The world transits of the coming decade of the 2010s shows a strong series of global transits that, in my view, shows that this decade will be truly the first one of the 21st century. The transit of planets that mark time, and cycles, are ending long transits from the 20th century; especially the transit of Uranus, which is ending a 84-yr. cycle in 2011 that began in the year 1928. This cycle is especially important in light of the mathematical aspects this planet makes to other superior (outer) planets in our solar system.

The times are changing, and I am encouraging clients and those who are interested in adjusting to the these changing times to make preparations in advance of the next decade due to these planetary configurations and the influences they have on the world.

If I am not mistaken even the biggest of economists fail when making predictions regarding various important issues related to economy. i think the same follows in the real estate market too which makes predictions so very a daunting task.

Originally Posted by thomas12

If I am not mistaken even the biggest of economists fail when making predictions regarding various important issues related to economy. i think the same follows in the real estate market too which makes predictions so very a daunting task.

That depends on the forecaster. All forecasting is daunting, and requires experience, and knowledge. I've done quite well because I've been doing it for some time, and base my forecasting on proven techniques. I don't allow opinion, or the "need to be right" to become a factor.

One of the problems with "predictions" is often that the person doing so allows ego, or their common interests to interfere with what is seen. I don't allow this.

We've seen this happen in all fields, including the real estate markets, where most professionals should have clearly seen the market was bloated, with wild speculation, and unfair practices, including working alongside appraisers to hike home values. The professionals who did see this, and continued to go along should not be surprised at the mess the entire housing industry is in right now.

A wise man once said, "Money is a great servant, but a horrible master." This saying neatly fits what has happened in the entire financial industry, and the real estate market. Now that the Era of Greed has come to an end (and it is coming to an end for now...) entire industries will have to start from scratch, and that is exactly where most of the nations and their industries are right at this time ~ starting over.

According to my calculations, it will take all of 2009 & 2010 for most of this to play out, with the new government-sponsored initiatives getting off to a start by Spring 2011. The best movers & shakers will be those who have weaned themselves off the "greed wagon" and those who have also taken themselves off of "models" designed to tell them what they want to hear.

I don't prescribe to views that are "popular" or that only appeal to the sensibilities of others. I tell it as I see it, and for a long time, I've been telling whoever wanted to hear that the entire system was corrupted, but many made money their master, and now look where it has gotten most people.

What you need to understand about the kind of forecasting I do is that it is interdisciplinary. I see all things as connected ~ not dis-connected ~ this is a key thing to understand when forecasting the future, including economic forecasting. We live in times where A does affect Z down the line, and a pain in the toe can give one a headache. Everything is connected, and so, it is essential when forecasting to work from this premise in order to see and forecast the big picture.

Forecasts for the real estate market nationwide in 2009 continues to be grim, as the residential housing market proceeds with increasing inventories and foreclosed properties amid poor employment figures, the next wave of bad real estate news is just on the horizon in the commercial area.

My astrological analysis of the economic climate in 2009, 2010, and 2011 continues to show that major changes are still ahead for the residential and commercial real estate markets that is directly tied to the corruption, and greed of Wall Street, the banks, and within the real estate industry itself after a eight year feeding frenzy of speculation in real estate as a whole.

In struggling economy, this new crisis in the commercial real estate industry, consisting of office buildings, hospitals, malls, and hotels will see in the years 2009, 2010, and 2011 hundreds of billions of dollars' worth of loans coming due. The comercial real estate industry is also seeking to have the government intervene.

Since December 2008, the U.S. Federal Reserve has met with commercial industry executives to consider the looming crisis in this area of real estate, but the credit crisis has made getting loans very difficult.
"It's a train wreck for the commercial real estate market," said Richard Cowden, managing editor of the Real Estate Law and Industry Report.

Commercial big real estate loans are very different from home loans because they have to be fully paid off or refinanced more quickly. "Their loans come due typically every seven to 10 years," he says. So, with several trillion dollars in outstanding loans on office parks, shopping malls, hotel, and hospitals, a lot of debt has to get refinanced every year.

According to Michael Grupe, vice president with the National Association of Real Estate Investment Trusts, there are about $400 billion in commercial mortgages that will mature in 2009 alone. Grupe said that in 2007, about $200 billion of commercial loans got refinanced through securitization ~ when mortgages were bundled and then sold to investors as securities ~ a giant pipeline funneling cash into the system.

In the first six months of 2007, that flow of money slowed to a trickle.
"In the second six months, it's zero," Grupe says. "It's zero. ... It's not like there's been a mild slowdown here. The pipe is frozen solid. No money coming out. "It is totally shut down," he says. "Totally shut down."

The writer Sushil Cheema reported that over the last several years, many U.S. cities have seen an explosion of bank branch expansions. With the current banking crisis causing banks to consolidate, many people are asking what will happen to all that commercial real estate space.