Housing Slump Predictions

Here's my shot at prognosticating the housing slump. If anyone else cares to give it a shot, let it rip!

QUESTIONS

1. Will the housing slump see the "bottom" by the end of December 2007 or has it not arrived? Predict the "bottom" arrival.

2. How do you think the new home and existing home inventories will fare by the end of December 2007?

3. Will existing home owners remain firm in their asking prices or will they start dropping their prices a little bit more?

4. Will the economy fare better or will be still be heading toward a recession?

5. Where will the interest rates go? Up, down or remain the same?

ANSWERS

1. The bottom is no where in sight, IMO. The earliest sign of the "bottom" might be March 2008, but if inventories continue to climb, it'll be much later. Of course, according to the NAR's Lawrence Yun and David Lereah, the bottom hit in 5/2006 and has hit every month since then! LOL

2. There may be a small spike in overall sales in July and perhaps August, but nothing dramatic. More likely than not, the houses will continue to accumulate with the addition of failed ARMS and existing home owners being stubborn in their asking price, further bloating the market.

3. New home builders will continue to offer great deals, but existing home owners will still remain fairly firm in their asking price but are starting to crumble, knowing that not many people are going to be thinking about buying a house with Thanksgiving and Christmas around the corner.

4. The Fed will eventually have to step in if the slump continues. There's a graph that indicates that after every housing boom, there is a recession. It's only a matter of time.

5. Interest rates will continue to climb through the summer, but as mentioned, the Fed will need to step in and drop the rates to increase the sales of homes to prevent the economy from going into an inevitable recession.

That's how I see it. The writing is on the wall for those who read it. I may be completely wrong, but I'd bet against it if I were a betting man.