My Housing Forecast for 2009

With the new year upon us, I thought that I would take a moment to give my opinion of what is ahead of us in the housing market for 2009. The picture to the left says it all. I do not feel that we have fit bottom yet. If you go back to what housing sales were like back in the early 2000's, say like 2001 and 2002 before the big housing boom, we actually have not declined quite to that point yet. In 2003, the lending requirements were lessened causing an influx of buyers into the market that caused this "bubble" that you have heard about. Early in 2008, we tightened the lending requirements back to, or maybe even a little tighter, than what they were in the early 2000's. Some of what you are seeing is an adjustment back to where housing sales should be at. The rest of what you are seeing is due to the economy and job loss. Earlier this week, MSNBC was predicting a summer unemployment number to be over 8% nationally and close to 10% by the end of 2009. I think that by the end of this year, you will see housing sales around what they were about 7-8 years ago.

In our area, South Bend and Elkhart have seen the bulk of the foreclosures. This is no suprise since they are highly populated areas. A trend though that I have observed, is that foreclosures are starting to hit more and more in other areas. Mishawaka has had a jump in recent months, Goshen has had a big increase as well. But I am starting to see more and more in Osceola, Granger, Bristol and other outlying areas. Those are the areas to keep an eye on. We'll always have numbers in the higher populated areas, but increases in the less populated and sometimes higher income areas are a sign that this is not over yet, and in fact might be worsening. Jobs are what is needed right now.

With all of that being said, values should not be dropping too much further, and that is good news. Interest rates are fluctuating all over the place, but are still at or near all time lows which makes it a great time to refinance or buy--that is if you do not have a house to sell. So, I see another year of decreases in both value, and in the number of houses being sold, but they should not be at the pace we saw this year. By the end of 2009, we should be close to being stable again which means we'll be close to the level back in 01 or 02 which is where we should actually be anyway.