San Diego Real Estate, Rancho Bernardo Poway homes, George Cooke

Housing Forecast

What's the outlook for the housing market in 2008?

2008 San Diego Economic and Housing Report

With all we've been hearing about the Housing Market and the Sub-Prime Mortgage problems, what should we believe about the prospects for Real Estate in 2008?

(Hint: It's not as bad as the news headlines may suggest.)

On February 6, 2008 I attended a meeting sponsored by Coldwell Banker where Gary Watts, a Real Estate Economist, presented his San Diego Economic & Housing Report for 2008. He gave a historical perspective on the market and covered the major factors that are affecting the Housing Markets and Financing, along with a forecast for 2008.

Click here for your free copy of the
2008 San Diego Economic & Housing Report

The following summary contains excerpts from the report.
(Source: "2008 San Diego Economic & Housing Report", Gary Watts, Real Estate Economist)

Factors Effecting and Affecting Housing

The Economy	Forecast: GDP growth should be between 2% and 2.5% for 2008. This means the U.S. economy will not see a recession this year.
Corporate Profits	Forecast: Corporate profits will continue throughout the year. Corporations have strong balance sheets which will help them through an economic slowdown. This strength will help to prevent a recession. In the past 6 recessions, corporations have had weak balance sheets.
Financial Corporations	Forecast: Banks will have more write-downs in 2008 but at a much smaller rate, and will begin showing some really big profits once again! Financial asset write-downs can easily become gains if conditions reverse.
The Sub-Prime and Prime Loan Market (Market Share of Loans, Delinquencies, and Notices of Default)	"You look at the magnitude of of the sub-prime problem, and it's just not that big relative to the size of the economy or the financial market." (David Wyss, Chief Economist at Standard and Poor's on January 4, 2008)
Income Growth	Forecast: With 4 million new jobs created since the housing downturn, the pent-up demand for housing will fuel the next housing turn-aournd supported by growing personal incomes.
Employment	Forecast: Even with a slowing economy, the unemployment rate should remain below 5.5% - a very healthy number for an economy as large as ours.
Interest Rates	Forecast: Expect the Federal Reserve to continue to cut the discount rate a couple more times before summer. These cuts, and the need for banks to get back into lending (big profit source), will continue to put downward pressure on interest rates for mortgages.
Lending	Forecast: This is not the first time there has been a crisis in the banking world. The good news is that it usually takes about 6 months for financial institutions to straighten out their mess. In the very near future, money will begin to flow again into home loans.

Housing Markets

The U.S. Housing Market	In November, existing home sales volume declined 20% but the median price dropped only 1.7% from a year ago ...
California Housing Market	... In California, 1.9% of households entered some stage of foreclosure process last year ... ... California's foreclosure problem exists primarily in only 293 (20%) of the 1,465 zip codes in the state ... ... almost all are located in the Inland Empire, the Central Valley and the Sacramento area.
Southern California Housing Market	December sales were the slowest in 20 years ...
Foreclosures	... At the end of 2007, only 1.033% of U.S. households were in some form of the foreclosure process ...
Reasons for Foreclosure	...The #1 reason: Fraud and/or Speculation ... ...The #2 reason: Unethical Lending ... ...The #3 reason: Loss of a Job, Medical Problems or a Change in Marital Status ...
Financial Support for Housing	Since housing is so important to the overall economy, it will always receive help when things go wrong ...

Pent-Up Demand

Where Will Demand Come From?

Cyclical housing downturns have always occurred. The good news is these situations do not last forever. The cycles tend to run approximately 27 to 36 months, so this cyclical downturn should run its course by summer ...

Incomes and Wealth

Income	Never before in the history of the world has a generation accumulated so much wealth as the baby boomers ...
Wealth	There are 390 billionaires in the U.S., holding $1.54 trillion in assets. California is home to 88 of them! ...

San Diego County

Sales and Prices	The December numbers showed San Diego's housing market may be gaining some strength ...
Defaults and Foreclosures	... Only 11.3% of sub-prime loan homeowners have missed 2 payments ...
Incomes and Wealth	San Diego County has a median income of approximately $55,000 ...
Population and Employment	San Diego County's population grew by 22,000 in the past 12 months ...
Housing and Rents	Economic conditions in San Diego indicate that the market is still growing, even as the pace of growth has moderated over the past 12 months ... ...The county ranks in the top 10 in the U.S. in rental rate increases at 5.8%, due to strong demand verified by the high occupancy rate of 96.0%.

Click here for your copy of the full report:
2008 San Diego Economic & Housing Report

Recent News Stories

Market Statistics from DataQuick Information Systems

Click here for Housing Market Data and News from DataQuick Information Systems

The Housing Crisis is Over
(WSJ.com The Wall Street Journal online - May 6, 2008)

The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.
To read the full story, please click here.

Foreclosure “crisis” is overblown
(MSN.com Money - March 5, 2008)

Although the national foreclosure rate rose 79 percent between December 2006 and December 2007, the rate was still only 1.033 percent of all homes. This is a regional problem, not reflective of the overall real estate market.

MAKING SENSE OF THE STORY FOR CONSUMERS
--Foreclosure statistics are rarely presented in context. Because about 30 percent of homes are owned free and clear, only seven-tenths of 1 percent of all homes were in foreclosure last year.
--If you rank the top 100 foreclosure areas identified by RealtyTrac as reported by MSN Money, only 34 areas had foreclosure rates above the group average.
--Fifty-one areas had foreclosure rates of 1 percent or less.
--Foreclosure rates actually fell in 14 of the top 100 foreclosure areas.
To read the full story, please click here.

Bernanke Prepared to Cut Key Rates Again
(Realtor Magazine Online - Feb. 28, 2008)

The housing market is likely to start stabilizing later this year, the Fed chair says.
To read the full story, please click here.

Housing Market Ready to Rebound?
(Realtor Magazine Online - Feb. 25, 2008)

Observers disagree on whether housing is about to enjoy a spring thaw or will remain in a deep freeze in the coming months.
To read the full story, please click here.

Find this article at:
http://money.cnn.com/2008/03/04/real_estate/markets_less_overvalued/

Things I can do to Help my Clients

One thing that is constant about the Market is that it is always there.
The market is always going through changes, but it is what it is. Smart buyers and sellers understand this and work with someone who can help them understand what the market is currently doing so they can take full advantage of it.

For Home Buyers - This market offers the best opportunities for buyers we have seen in years. I'll work with you to find the best housing values that meet your requirements. Even if the best deals are in foreclosures, short sales, or auctions; I'll take you there. I'll also help you learn about the newest loan programs and discover which loans are still working. I'll put you in touch with an experienced and capable lender who can get you pre-approved for a loan that will stick.

For Home Sellers - Please call me for a free market analysis showing the current value of your home. Also, I will be happy to provide you with my Marketing Proposal to sell your home. When you list with me, I will aggressively market your home with professional materials, a photo marketing plan, and a strong Internet presence. When offers come in, I'll scrutinize "pre-approval" letters for details of financing. I'll check to see if high loan to value approvals are still valid. And, I'll use my preferred lenders as a double check to qualify buyers who are working with other lenders.

Questions? - Please call me so we can talk about your interests.
George Cooke (858) 674-1222

Or, send an email to George@GeorgeCooke.com

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