U.S. Housing Market Forecast 2009

[Crewleader]

Housing-Market / US Housing Dec 26, 2008 - 09:59 AM

By: Money_and_Markets


Mark Larson writes: I don't know about you, but I had a great time watching my little girls open their presents on Christmas morning. You should have seen the smiles on their faces! I sincerely hope that you and your family are relaxing and enjoying this holiday season as much as I am.

But soon, thoughts are going to turn from relaxation to reality. Investors are going to focus once again on the wounded real estate market. And millions of homeowners and commercial property owners are going to ask that all-important question: Will 2009 be “it” — the year when things finally start turning around?

I wish I could say I was optimistic.

But the evidence I'm weighing points to another disappointing year. Indeed, I expect 2009 to be marked by lackluster sales and falling prices in the residential arena, and a deepening crisis on the commercial side of the ledger.

Housing Bottom?
Not That I Can See …
http://www.marketoracle.co.uk/Article7960.html

[Citizen Number 9]

1. It's hard to forecast a turnaround in 2009

With home values still on the downslide and lenders wanting to see mortgages with 10%-20% equity, that leaves a very small pool of new buyers and a small pool of homeowners who have enough equity to even re-fi.

That makes for very small moves within the excess "supply" of homes on the market.

A 11.8 month "supply" of homes could be more like a 2 or 3 year supply at the rate of decline we've seen.

[physioex]

2. It's actually worse than that.....

I addition to the excess "supply" if you watched the piece on 60 minutes, you would see that the Alt-A and Option ARMs are about to reset. Making the next four years a bloodbath......

http://www.cbsnews.com/stories/2008/12/12/60minutes/main4666112.shtml

[leftofthedial]

3. someone could afford presents for their little girls?

:wow:

Who knew?

[Citizen Number 9]

4. For all the doom and gloom presented, it would appear

that most people are still employed and going about their lives substantially as normal, albeit with some greater level of apprehension and stress.

Unemployment is still below 7%, that means 93% are still employed.

Even foreclosures run at a few percent annually, leaving 97% holding on to their houses each year.

Holiday sales were "only" down about 3% this year, leaving a huge pile of presents to be opened.

So, while Holiday tidings may have been bleak for a few affected by this crisis, the great majority of workers continue to work and earn and provide, and it is they who will support things over time.

[marketcrazy1]

5. the main line unemployment number

is around 7 percent but the U6 number is over 12 percent thats worse than the recession of 1980 wich ( up to now ) was the worse recession since the depression, looks like we will easily have the most severe recession in history. ( if not a full on depression ) many of the currently employed are now ( or becoming ) under employed. I personally no of no one who is " going about their life substantially as normal" they are all cutting back on non essentials, saving what they can and delaying big ticket purchases such as autos and appliances unless they absolutely need them... I am doing the same. ( prepare for the worst and hope for the best )

[Citizen Number 9]

6. I certainly agree with you on the growing feeling out there

and a prudent person would do well to follow all those practices you mention, however, the actual numbers that come in seem to belie the popular perception.

For example, the poster above acted as if no one could afford Christmas presents for their children this year. The truth is that Holiday revenues were about 3% below last year. Functionally, this means that those who spent, on average, $500 last year were spending $485 this year. That is hardly a dent in the pile, especially considering the discounts encountered at the sales register this year.

[leftofthedial]

7. "Unemployment is still below 7%"

In the capitalist propaganda fantasy world.

[Citizen Number 9]

8. What is unemployment in your world?

If by "capitalist propaganda fantasy world" you mean the US Bureau of Labor Statistics, then yes, that was the source of my number.

Please show how it is derived in your world using actual numbers and definitions so we can more fully understand how your world differs.

[GliderGuider]

9. I think a useful measure would be an average of U5 and U6.

http://www.bls.gov/news.release/empsit.t12.htm

U5 is my perception of "unemployment": Total unemployed, plus discouraged workers plus all other marginally attached workers (persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past), as a percent of the civilian labor force.

However, in terms of gauging the effect of low employment on the economy, including some number of underemployed would seem reasonable. According to BLS, the seasonally adjusted November numbers for U5 and U6 (which includes temporary or part-time workers) are 7.8% and 12.5% respectively. Averaging the two gives 10.2%. The YOY increase of this measure was 3.2%, so it's rising fairly fast. This agrees with my perception of the economic slowdown, though I expect the March 2009 number so be up to 15%, mostly because the the percentage of part-time workers is rising faster than U5. This is to be expected as the economy relaigns toward a more "flexible" employment paradigm.

[Citizen Number 9]

10. I disagree with the inclusion of U5 and U6.

I'd entertain U4, even though it includes workers who are unemployed as a result of minimum wages that are too high.

BTW, thank you for posting the bls definitions for reference.

But not U5 and U6, even though it somehow seems "compassionate" or whatever.

Here's why;

Everyone wants a paycheck. You can't question that. What's different about those workers is what they are willing to do to get one; and it ain't work. They're not even willing to go out and LOOK for the job. We call that state "discouraged", I guess.

There are also people represented in there who are happy to work - on their terms and maybe not two days in a row if they find that inconvenient. It's very hard to include them in a labor force because of the difficulty of identifying them. That state can change daily. It's best to track those who want to work and are actively doing something about it. They tend to be a more consistent group, anyway.

[GliderGuider]

13. Overlaying a moral judgement on statistics

May be satisfying for you, but it's neither useful nor interesting to those who don't share your views.

[northernlights]

11. NO, CITIZEN #9, 7% unemployment does NOT mean 93% employed

Are you truly this ignorant?!?! Or is this willful ignorances intended to insult people?

The unemployment statistic of 7% refers to NEW APPLICATIONS FOR UNEMPLOYMENT COMPENSATION only.

It does NOT include existing unemployment. It does NOT include people who lost 20+ year careers and, after a few months or years of rejection letters, have gone back to school in their mid-50s and are spending their retirement savings to learn a new trade in hopes of getting employment so they can work until they keel over.

It also does NOT include people with part time jobs who are going down because they need full time to survive.

It also doe NOT include people who once had good incomes who now work as janitors and live with their 85 year old mothers, like a friend of mine.

The REAL UNEMPLOYMENT FIGURE was 12.5% a couple months ago. That was before something like 650,000 people were added last month and 500,000 the month before.

Jesus fucking christ, tell me, were you born a total asshole? Or have you just practiced at it for a few decades. Because you sure fucking are fucking good at it, you fucckuing smug, arrogant pig-bastard.

[Citizen Number 9]

12. It appears that you don't accept the "official' calculation method.

Whatever method you accept, the fact is, that when discussing percentages, the whole minus a percentage = the remaining percentage.

1 (the whole) -7% = 93% (the remaining part)

Quite simple, really.

As I noted above, the unemployment rate needs to describe a real situation. It's too easy for people to "want" a paycheck, yet do nothing about it. The unemployment rate describes those who are clearly unemployed as evidenced by recent actions. According to the Conference Board, less than half of Americans are dissatisfied with their job, but we don't include them in the unemployment rate simply because they might want a more satisfying job.

That may be part of the reason the unemployment rate does NOT include people who are working as janitors. They are, in fact, considered employed. Sorta makes sense to me to do it that way and I'm sure the janitors probably agree.

You might pay closer attention before jumping in so rudely. As the official rate is currently 6.7%, the 7.0% rate actually refers to the addition of the 0.3% who are "discouraged" workers. You also might be a bit confused as to the definitions. Someone kindly supplied a link to the actual definitions for us, above. Take a look.

People who act rudely, like you are, are the ones giving DU a worse reputation than it deserves among the opposition. Sorta surreal to see you implying I have intent to insult when you are the one who insults everyone repeatedly.

[GliderGuider]

14. Not quite.

All you can say is that if 7% of a sample meet a particular definition, then 93% don't meet that definition. Given the elasticity of the definition of "unemployed" this doesn't mean that the remainder are "employed" -- especially if the word "employed" is used in its normal sense of "working at a paying job". In other words, since there are 6 official definitions of "unemployed", then "not unemployed" isn't synonymous with "employed".

[Citizen Number 9]

15. OMG, You Are Right

Well, not quite. :)

If you are accepting of the stricter definitions, it really is as cut and dried as I said. For the ease of simplicity for most readers, let me refer you to a "FAQ" of the BLS;

"What are the basic concepts of employment and unemployment?

The basic concepts involved in identifying the employed and unemployed are quite simple:

* People with jobs are employed.
* People who are jobless, looking for jobs, and available for work are unemployed.
* People who are neither employed nor unemployed are not in the labor force.
"

Note that I highlighted "labor force" as that is the denominator in the stricter interpretations of the unemployment rate. When you move into the looser definitions, the additional workers are added back into the denominator (the whole) for obvious mathematical reasons.

If you can't agree on whether the glass is half full or half empty, then maybe the glass just needs to be re-sized, huh?