Expectations for Real Estate and the Economy in the Tri-Valley for 2008
February 14, 2008
Every time I have the opportunity, I go and listen to one of my favorite speakers
, Carole Rodoni. She is currently the President of Bamboo Consulting and delivers speeches throughout the Bay Area. In Carole’s most recent discussion, she talked specifically about the economy and the 2008 outlook for the real estate market within California and in particular, the Tri-Valley area.
In terms of the economy, Carole expects the slowing to continue due to the following indicators. She predicts:
- GDP will continue to drop to about 2.6%
- Inflation to rise to close to 3%
- Bond Yield to increase to about 5%
- The stock market will be the “to own” asset
- The Fed will continue to lower rates
- Mortgage interest rates should remain in the 7 to 7.5 range by year-end
The housing market is a mixed bag. Our Tri-Valley real estate market is now well into a one year correction, which many feel will last into 2009. The main question is when in 2009? Nationally, there are over 2.2 million homes predicted to go into foreclosure. First-time home buyers and investors have essentially vacated the current market. Loans are harder to get, short sales and foreclosures are on the rise, and new developers are drastically discounting homes. However, we have to remember that real estate is hyper-local. When trying to predict an outlook for our market, we have to concentrate on what is occurring right now in the Tri-Valley. Even looking beyond to the greater Bay area can sometimes muddle up our predictions. Carole even went one step further in her speech and noted that the individual markets are becoming more fragmented. She feels that within city boundaries, there will be multiple offer markets, flat markets, declining markets and areas were no activity takes place. To find out which neighborhood is which, an experienced, tech savvy and statistically interested Realtor comes in handy.
As the year marches on, sellers will have to get more aggressive about pricing, and become flexible at the negotiation table. Buyers will start to come back to the market with a much more cautious attitude and some may find themselves priced out due to lender restrictions. The bottom line is that 2008 is expected to be a balancing out and a return from the highs and lows of the last few years. Hopefully, this will make room for a more traditional market.
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