Money Magazine’s Forecast 2009: Year of the Thaw predicts another year of declining prices for housing across the country. Stephen Gandel, the author of the article, rebukes the old adage that real estate is all local and points out that the cause of the decline in housing is mainly due to the national credit crisis. Banks aren’t readily lending money and their rates are higher.
He points out that 18.6 million homes are currently sitting vacant in this country and 2.8% of households are at least 3 months behind on their mortgage payments. That number is up from 1.4% a year ago.
Nouriel Roubini, an NYU economist who accurately predicted the initial decline in housing, says home prices will see another 20% decline in 2009 just as we witnessed in 2008.
Patrick Newport of economic forecasting firm Global Insight predicts a decline of 15% and sees the damage spreading to areas that have not been affected such as New York City.
Of course, the always optimistic Lawrence Yun of NAR, predicts an increase in home prices of 2.8%.
I wish I could say who’s right, but I gotta say there’s probably going to be another down year for home prices. The credit crisis is definitely affecting everyone, but local factors such as oversupply, unemployment, median wage, cost of living, price to rent ratio, and number of new residents moving into an area among others are still the overwhelming influences on the market. Here in Orlando, there’s over 20 months of inventory, rental rates are not high enough compared to prices, and there’s less people moving here. Real estate is local but unfortunately, we’ll probably see another year of price declines.