Can anyone predict the future with any certainty? I doubt there is anyone who can. Although, the politicians will tell you with certainty what will happen. It is just a simple matter of approving their proposal. They leave you with the threat that If you do not do their plan then everything will be bad.
Without being political, can we look at events and draw conclusions that seem reasonable? How can we project what to expect in 2010?
2010 is an election year. The pressure is on the politicians to do something to earn your vote. They must kill the gloom and worry that public currently feels because of the poor economy. They must do something to encourage the economy to grow. The politicians must try to bring unemployment down. If they can not do so, they will probably do something to at least give the perception that the economy is growing. That pereception alone creates consumer confidence. They hope to translate the confidence into votes.
Conclusion: The economy and jobs will NOT continue the downward spiral as we approach the election
There has been no hesitation for politicians to pay out enormous amounts of money to save the big, huge, enormous businesses. The dollars spent merely add to the national money pool. The dollars do not reflect an expanded Gross National Product. The dollars have been added to the available dollars without any additional GNP. The added dollars spread over the same GNP is classic inflation. Also known as the deflating of the dollar.
Conclusion: We can expect to realize heavy inflation in the not too distant future.
Wealth is created by the production of goods and services. If there are no new goods and services, there is no new wealth. The strength of the USA economy has been the initiative and the imagination of individual taking the risk to a new product or service. Politics aside, the economic engine (small business) will find ways to prosper under the given circumstances.
America has experienced a "roaring 20's" episode over the past several years. Everyone was living good. The banks let people live high on borrowed money. 2009 saw the end to easy money. 2010 will be a year in which small businesses and individuals will have a better opportunity to borrow.
Conclusion: More money will be available to qualified borrowers.
The reports reveal there is a 2-3 year inventory of loans that have not yet been reset. The banks are planning on making lease for keys and streamlining loan mods in an effort to flatten the spike.
America has seen the building of new homes come to a virtual stop. There is the perception that there is an excessive inventory of houses. The new houses that were built and selling at inflated prices, were being occupied. Many larger houses were lived in by more than one nuclear family. The housing inventory was being effectively utilized. There was not an idle inventory of houses. The houses that are vacant today are a result of economic pressure. They are not the result of too many houses being built. When the resident/home owner could no longer afford the house they had been buying, the house became vacant. Most of the former home owners still wish they could buy a house. The economy prevents them being able to buy. Banks are holding foreclosed houses off the market and allowing the market to stabilize. This process has produced an increase in house prices. Bankers know that the value is not dropping. They also know that the current price of many homes is at or below replacement costs. They are holding appreciating assets. They will wait it out.
The lower housing prices and the low yield on many other investments are bringing investors to the market. They are able to get 6%-10% return in today's rental market. This return is NOT dependent on appreciation. Real estate has usually been a good investment during inflationary periods.
There is very little new construction coming on the market. Overall, the housing inventory is getting older. Without replacement housing being built, it is a depreciating inventory.
Conclusion: There are not excessive houses that can not be absorbed in a stable economy. The inventory will reasonablly be absorbed when the economy recovers. There will be a demand for new construction at that time.
2010 will see the employment picture begin to turn around. We will see inflation threatening the recovery. Banks will have to develop loan policies to allow for home loans to a different buyer than in the past. Your job may be your credit. Interest will not stay low.
Housing in the Eastvale, Corona and Norco area was hit hard by the downturn. Over the last year, it has actually seen an increase in prices from the lows of January, February 2009. The bank owned houses are hitting the market in a systemmatic manner. The government bailout is still playing a role in the market but overall it appears we are at present in a stable market.
Conclusion: It seems reasonable to project that 2010 is a good year to buy a house or two.