Your call: Housing predictions for 2008

Thanks to all who contributed predictions for 2008. Below, some of my favorite L.A. Land reader predictions for 2008. For those who missed my predictions, they're here.

Your predictions:

Mark G: "There will be a new definition for 'Sweat Equity':  'The value of my home and the loss of equity is causing me to sweat profusely.'"

Victor the Predictor: "(Countrywide CEO) Angelo Mozilo will become ambassador to the Calabasas Pumpkin Festival."

Michael T: "The naysayers on this blog will continue to live cheap, petty little lives even after they manage to buy the property they've always dreamed of."

Michael Snyder: "A flood of new taxes, fees and fines will assault home owners and small businesses as panicked local governments try to make up for the loss of their predicted windfall from increasing property taxes."

Cal: "Mortgage insurance companies will start imploding constraining mortgage credit further (especially hurting the Fannie/Freddie market). 30 yr fixed rates hit 7.5% as investors back away from the mortgage market altogether."

Who Cares?: "Bubble blogs, which have contributed to the hysteria, and continue to do so, will fade and go bye-bye, just as the hot real estate market of yesterday did."

Brettdl: "The U.S. government will be forced to bail out Fannie Mae and Freddie Mac. Countrywide will go belly up or be bought out by a foreign entity."

Amir: "2008 will cause builders and contractors to default, throwing their inventories back to the banks, and send prices even lower for 2009 when we'll see the recession everybody's talking about."

More from Cal: "So. Cal sales start showing slight year over year increases in August 2008 and each month forward. Resale inventory plateaus."

Rob: "Kate in the Valley will finally settle on a 3-bed 2-bath craftsman near a park for 50% off peak prices. Sells the movie rights for full value."

Keith: "Kate will be played by Sandra Bullock in the movie, or possibly that gal from 'Weeds'."

Bonus prediction from L.A. Times op-ed columnist Joel Stein:  "Home prices drop an astounding 15%. Far more disheartening to Americans who bought homes in the last three years, stainless steel kitchen appliances go out of style."

Thanks, everybody, and Happy New Year.

Comments

[Benjamin Brown]

The soviet-like elite which has infiltrated and infected the upper levels of the U.S. banking hiearchy will be eliminated.

[Drew]

We're expecting prices to ease down a bit more through the course of 2008, but not drop a whole lot more.

We're also planning to buy in the next 6 months or so, whether the market has hit bottom or not.

[markl]

Prices and in LA county will drop 20-40% this year...and hideous granite countertops will go out of style faster than stainless steel appliances.

[Victor the Predictor]

Couldn't resist this last prediction (bottom of post). The following I lifted directly from the website for the United States Embassy -- Holland website:

"Previously, Amb. Arnall was Chairman of the Board of Ameriquest Capital Corporation, a privately held financial services company headquartered in Southern California. Founded by Amb. Arnall in 1979 and driven by a vision to make homeownership a reality for millions of Americans, Ameriquest Capital Corporation has become one of the leading financial services companies in the United States. Ameriquest’s success is based in part on the fact that it helped modernize the nonprime lending industry, which today is recognized as an essential part of home financing in America."

What's the prediction? It will be heavily edited within two weeks (has to go through channels, I'm sure).

[amir]

Here is my prediction on top of my prediction:

Everybody, especially me, are wrong. Something else happens that we can't predict and will throw everything to the trash: war with Iran? terrorist attacks? revolutionary biotech cures? Financial meltdowns? Earthquakes? A resurgent Hollywood post strike?

If nothing like that happens, then many of the predictions here are true, especially Michael T's about naysayers being cheap and bitter. Guilty as charged.

Happy New Year everybody!

[Manny from Inglewood, because its Real Estate... unlike that other Fake Estate]

the one by Michael T and the other by Rob are the best! Kudos!

[Enlightenment]

Think Big: The coming 2008 Earthquake destroys or damages so many homes and businesses that droves of people flock to other states and countries. An earthquake during a Santa Ana firestorm would cause large parts of the metro area to burn out of control.

More Realistic: In 2008, housing prices will flatten out, many fools will buy a house, a big wave of foreclosures will hit, housing prices will fall, and all those fools will be begging for relief from their stupidity. If you buy a house in LA metro area in 2008, you are either a fool or you have more money than brains.

Very Easy Prediction: We won't see the bottom of housing prices in 2008, because the ARM mess is not over.

Future: Scores of businesses will move to the inland empire and high desert (and other states) to escape high rent and salaries.

[hb]

So if stainless steel is out, what's next? Harvest Gold and Avocado Green?

[anon]

All the money we spent at WalMart on cheap stuff and all the money we spent filling our SUVs will start coming back to the US as foreign Sovereign Funds dump hundreds of billions into troubled but cheap financial corporations.

Citizens will complain.
Congress will debate.
But we'll take the money because, well, we have to.

Shouts of, " 加油！加油！加油！" and "Allah Akbar!" fill Wall Street.

[toby]

The Writer's strike runs until Summer, putting further pressure on the high-end real estate market. Which will cause deeper deflation of home prices.

[Montana skier]

Like so many things it will not be as bad or good as anyone thinks - prices down about 15% to 20% -- bottom coming about one year from now - spring of 2009 it will turn up again - slowly

[shockg]

my 2008 prediction is the market will slowly turn around and Peter Vile will get canned.

[D]

Prediction is very hard, especially about the future - Yogi Berra

[Hula Girl]

Lefty and Ann run off to Las Vegas and get married by Angelo Mozillo. They buy a foreclosed condo in Parhump, Nevada and open a nuclear waste site which becomes 'must stop' for tourists. They name their children Peter and LaLa and live happily ever after.

[Martin]

Enlightenment writes: "In 2008, housing prices will flatten out, many fools will buy a house...and all those fools will be begging for relief from their stupidity. If you buy a house in LA metro area in 2008, you are either a fool or you have more money than brains."

You're so enlightening, Enlightenment. ...Like a truck driving over a kitty.

The only way to predict the future is to have power to shape it. So what are you going to shape this new year, Enlightenment?

This real estate downturn came fast. I predict it will end in a similar fashion. ...Maybe not in 2008, but certainly by 2009.

[Rich]

I predict the real estate crash leaves such a bad taste in the mouths of bubble buyers that granite countertops, travertine tile, and other symbols of excess go immediately out of style. Buyers also rediscover textured ceilings, a favored device of none less than Frank LLoyd Wright, and stop calling them "popcorn" ceilings. The Prairie style makes a comeback and small independents try their hand at imitating FLR's "Usonian" designs. Communities in all regions of the country begin to tax new construction for excessive energy-usage features, leading to the death of the mega-square-foot McMansion. Insurance arsons climb dramatically, as they did after the 1991 real estate crash. Demolition of abandoned housing by communities at taxpayer expense becomes an issue...

[chunk]

People will learn how to say Aksk.

[ash molari]

Peter - A resident of Los Angeles who just returned from India (I grew up there before emigrating to the US ten years ago), I think the real estate mania has just started here - looks like they are in year two of an unprecendented property boom. Prices in my old hometown (if Mumbai is pegged as Los Angeles, this city is analogous to, say, Fresno) have increased 3-4 times in thi period for land as well as apartment buildings and speculation is rampant with properties changing hands between investors three-four times a month. I see billboards on every street corner from local and multi-national financial institutions (who seem oblivious to the real estate mess in the US) asking people to "unlock the value" in their property holdings by taking out home/land equity lines of credit, and yes, many of these billboards also have written in bold "no income proof required" in the local language. My relatives seemed to think that property price apprecation has only begun and will continue unabated for the foreseeable future - they gave me the very same arguments as I have heard over a dozen times in Los Angeles - There is only so much land, the Indian economic growth (and by this they mean the stock market that has already quadrupled in the last few years) will continue foreever, and the tried and tested - foreigners (by this they mean Indians living and working abroad, especially in the Persian Gulf states such as Dubai) are dying to buy property in this great little town of ours. They laugh off any suggestion I make that things may not be as hunky-dory as they think. From what I see here, the same phenomenon is occuring in all the small towns across the country. I think India might be in for a rude shock of its own in the next year or two.

Ash Molari
West LA

[Aaron Kramer]

2008 - U.S. led recession becomes a global Depression by the end of the year. Real estate, stocks, bonds and fiat currencies all swoon as investors question the efficiency of U.S. Capitalism. The 2008 Beijing Olympics are a utter disaster as air pollution hobbles the games and focuses the world on China's environmental impact. The Chinese economy slows dramatically as its ultimate end user goes bankrupt and the build up to the Olympics ends. (Think Y2K and the tech sector)

[Keith]

I am wondering what are the fundamental differences between now and 1989 that will prevent a deep R/E devaluation from happening again? Anyone care to put a little thought into that?

[BobR]

Polished granite is found to be cancer-causing, resulting in a massive wave of kitchen demolitions.

[Susan]

I predict Joel Stein nailed it.

[Blows Against The Empire]

Jesus will return and give everybody 125% of the 2006 market value of their Home and give them back the deed. In His Father's House, there are many mansions.

[MyLessThanPrimeBeef]

First, a 2008 New Year's resolution from my cat:

Less sex...with myself.

(Remember, that's from my cat.)

Now, one more try at predicting 2008, from yours truly this time:

Gravity, long thought to be extinct along with numerous species of plants and animals due to the activities of the smartest animal of the whole universe, is re-discovered: what goes up, must come down, even with Viagra (do you hear that, Uncle Bin Lackey?!?!?!?!??!).

My second prediction: Elvis lives still and is spotted driving a 50-MPG Dymaxion car designed by Buckminster Fuller.

[sheila]

i am wondering why peter has not linked to or discussed the stories of the financial struggles of states and counties resulting from the "real estate market correction" so far? losses in property and sales taxes are much more severe than anticipated, and will get much worse before they get better.

looks like our bitter renters will get considerably less than they bargained for when their kids' schools double class sizes, libraries close and fire/police services are slashed because of the crash they so desperately say they want.

the entire economy of the past 6 years revolved around this false wealth from bloated real estate valuations, so why don't people realize that a crash will destroy many many lives other than flippers, greedy dummies and real estate agents/brokers, and that the boom benefited all of us in ways other than isolated home purchases?

i think its safe to say that 2008 will be the beginning of a recession which reaches almost all of us. high costs of borrowing will create slowdowns and/or stoppages in hiring, expansion, payment of dividends and wage increases, which will deepen the recession further. americans have a negative savings rate, which will start to catch up to us this year when we have no more borrowing power, and it's gonna be a very tough year for most of the middle class, even those who were not living beyond their means...

sorry to be a bummer.

[Ken P.]

If Hillary is victorious in Nov., the market - in the initial stages of recovery - will be hit by the new reality: the end of the 15% capital gains tax limit. The rush to sell before the lower tax limits expire in 2010 will dampen any real price increase that will be coming. Get ready, it's going to be a very bumpy ride.

[Enlightenment]

Hey people...the title is "Your call: Housing predictions for 2008". What does "olympics, extinction, elvis, cats" have to do with housing predictions? I could had added lots of non-housing predictions too, but I didn't.

[vultur]

I am wondering what are the fundamental differences between now and 1989 that will prevent a deep R/E devaluation from happening again? Anyone care to put a little thought into that?

Posted by: Keith | January 01, 2008 at 10:21 AM
______________________________________
That period was defined by a very high unemployment rate. If unemployment spikes you can bet that real estate values will slump further across the board. Widespread unemployment has yet to surface in the Los Angeles Area.

[Enlightenment]

Martin writes "The only way to predict the future is to have power to shape it."

Wrong, that is not the ONLY way! Even if you try to shape the future, what you attempt to shape may be bigger than what you can shape.

A person can predict the future by having wisdom / knowledge / understanding of trends about a specific subject.

You can't shape natural disasters that may radically change the future. I was joking about an earthquake in 2008, but I would be correct stating that a major earthquake will hit the LA metro area in the future.

Martin writes "So what are you going to shape this new year, Enlightenment?"

Like I always do...state my opinion on blogs...and avoid flaming specific people and becoming a troll like you.

[Enlightenment]

Predictions for 2008 from IrvineHousingBlog.com:
http://www.irvinehousingblog.com/2008/01/01/
predictions-for-2008/

[lloyd_la]

CAR and CREDIT CARD consumer defaults (many times the housing losses) will take center stage. By the end of 2008, further housing price declines will be shrugged off, and everyone will be talking about new TLAs (three letter acronyms) they will coin specifically for car and credit payment delinquencies. And yes, house prices down about 20%, but that will be irrelevant.

[shockg]

Enlightenment, Posting articles from one-sided fantasy bubble blogs like IHB won't help your cause.

[Rich]

20 years from now prices will be double what they are today!

[dynomite1]

1. Prices will continue to slide in 08 and should hit bottom by the end of 08 or early 09. Todays crappy salaries can not sustain todays housing prices.

2. Granite counters will go out of fashion(so over done). Popcorn ceilings will come back into fashion. So will polyester suits.

[LosLocos13]

Ask Michael T how many properties hes got in escrow right now. Lmao. Can you feel the confidence?

[Martin]

Ah, now I remember. Once before you called me a troll because I likely represented an opinion that suggested I'm a homeowner. ...Or when I said something that did not have universal appeal.

Okay. We'll replace the kitty with a troll. But you're still the Big Mac running over every contrary opinion but your own. You can dish out profound comments. But you can't handle it when others take note of them.

I hope for a stable economy, new lending standards by credible banks, and a resurging belief in the importance of owning a home. You hope for a housing market collapse so you can buy a home on the cheap.

[Victor the Predictor]

Landsakes. Martin and Enlightenment have beaten me to the punch. I thought that next I would be predicting that we will be focusing less on predictions and more on shaping the coming years. Perhaps the happy medium between making impotent predictions, and guiding our economy like a laserbeam to the moon, works something like those big balls at rock concerts?

The goal is to keep the thing up in the air, and this is fairly easy to do as long as you don't hit an unexpected patch of people that don't partipate, or some joker that sends an unexpected knife upwards as it lands on him. Can't realistically control the direction the ball will take, but it *will* remain in play barring earthquakes and alien invasion. Limited analogy of course.

I've been keeping an amateur eye on recent research, including research by those advising the fed and other agencies. Though they seem to be discovering more and more the importance of the relationship between price and rent (which we understood long ago on this blog) -- they all still suffer from trying to predict the future based on the past.

Simply put: far too many variables to put in the computer. It's whack-a-mole on a national and global scale. The only ones who seem to be able to profit monetarily day in and day out are the ones who can manipulate and fool others without too many twinges of conscience. You can feed mba students all the ethics courses you want; they are still going to get out of school and beat you to a pulp for themselves, their families and friends.

Stray thought for the day: There doesn't seem to be any concensus as to when or where the term "Ivory Tower" was coined. Maybe bible. Maybe France.

[Brian]

Countrywide and Washington Mutual will be acquired by Bank of America and Wachovia, respectively, making Charlotte, North Carolina the banking center of the United States.

Prices in California will decline a further 25% over the next two years. Option ARMS will be 2008's subprime. Foreclosures will spread from the Inland Empire to the Westside.

[MyLessThanPrimeBeef]

Monk: Master, how can I enter the Way?

Master: See that gentle breeze?

Monk: Huh?

Master: OK, do you hear the breeze?

Monk: Yeah. So?

Master: You enter the Way through there.

Monk: Kwatze!!!!

Everything is interconnected, the master was trying to show and thus our monk achieved Satori.

And this brings me to the topic of the living in caves and another fearless 2008 prediction from yours truly.

I foresee cave living as the latest trend in real estate, the next hot thing. Right now is the best time to get in on the ground floor, to be at the top of the next financial pyramid - minimal improvement needed (it's more or less constructed already) and cheap to maintain. You heard it right, the very quantum/Zen like paradox of being at the top and bottom simultaneous...kind of like being rich and poor at the same time investing with subprime/option/negative amortization mortgages. But get in now as most people still have not discovered cave living yet!!!!!!

[Kate]

I predict that I will rent all the way through 2008 because we won't have seen the worst of this before 2009.

The writer's strike will end in March, when the networks are truly out of material. But the strike won't have any crashing impact on the housing market because plenty of writers are renters and the ones who were in big ole houses in the hills don't exactly live paycheck to paycheck.

A lot of neighborhoods that really stepped up during the boom (are you reading this Valley Village?) will step back down because 25% of the houses on any given block will be rentals and "pride of ownership" will fall by the wayside putting further downward pressure on the listing prices in those neighborhoods.

A lot of people who came to Los Angeles to make it big in Hollywood will go back home and go back to college or the family business (just like they do every year) but we'll read about them in the paper as part of the mass exodus stories.

You won't be able to rent an apartment in Santa Monica (remember those days?) because demand will far exceed supply and the landlords won't need to advertise the few vacancies that pop up because the heirs are moving in.

[J Rodgers]

Real estate prices will only drop 10%. Rental averages will NOT rise enough to cause prices to drop 15 to 25%. The glut of new homes will force more FSBO's home sales, which in turn will stabilize the market in Cali and U. S. Why? Sovereign financing has fueled a new wave of cash flow from foreign investors into U. S. real estate. Single family residental property will make a comeback after the correction because the feds will use SBA, FHA and HUD programs to get government workers and small biz owners to purchase homes. In turn, private pensions will allow workers to use their pensions as down payments for government secured morgates, which will be bought by investors backed by sovereign financing.

Its already started and a democratic president will accelerate this process.

[anonymous]

j rogers. 10% has already happened. 8 by the median sales over 10 for the median listing. and inventories are explllllooooddddddding. 10%? You must work for the NAR.

[Enlightenment]

I predict there will be more housing industry people trolling this blog and trying to convince people the situation isn't that bad. Read through the above comments and you should be able to pick those trolls.

[Joseph]

Keith,

This downturn is going to be more "Prolonged" than in 1989....I would say, we will hit bottom in 2012...We will have the ups and downs in between...This is in California and Florida only....Every state is going to have a different experience...

[Jason Hoppe]

When Hillary is elected president, she will be impeached for having an affair with Angelo Mozillo. Countrywide, FNMA, and FHLMC will be merged to form one central unprime lender for 99% of America's working class who now make minimum wage after 3 minimum wage jobs are created as 6 prime jobs are outsourced. 90% of all the propulation will be millionaires, but the price of a cup of coffee will be $10,000. Volkswagen will reintroduce the air cooled beetle with a 20 hp motor, which will get 200 mpg in the city with the price of gas at $6.66. The US Gov't will go into bankruptcy protection, and China will buy out the country for $.000000000001 to the dollar. An ounce of gold will buy you a car. An ounce of platinum will buy you a home.

[AAAAANDRE]

Prices will rise again as the dollar becomes worthless.