My Predictions: July 5, 2007

1. When will the housing slump end in FL and in the US? (sarcasm: Lawrence Yun can forecast this globally )

2. In your opinion, what will the median price of a home be in the US and FL at the time when the market hits the bottom?

3. Will the country go into a recession by the end of the year?

I'm curious about how everyone would answer these questions, as well!!! The answers are time stamped, so we can look back and say, "Yep, NYCF was completely wrong!" or vice-versa.

I'm not a RE pro, but here's my answers, based on my kajillion hours of research (and gut feeling) so far:

1. When will the housing slump end in FL and in the US?

Answer: There'll be spikes both statewide and nationwide, but the bottom won't happen in FL until at least 2009 (or probably later). That doesn't mean I'm willing to wait that long to buy a house. If I (or anyone, for that matter) find a house that matches what I'm looking for at the right price, I'll buy it. Nationwide, the US as a whole will recover quicker, with the exceptions of states like CA, FL and AZ. That being said, with the upcoming reset of ARMs, the sluggish economy and current stagflation, the nation won't recover until at least 2009, too.

2. In your opinion, what will the median price of a home be in the US and FL at the time when the market hits the bottom?

Answer: The median household income for Florida (based on a 3 year avgerage, ironically during the housing boom years of 2003-05) was $42,079. According to Century 21, you can afford a home equal in value to between two and three times your gross income. So if the median Florida salary is $42k, then they can afford a home that's worth between $84k and $126k.

This answer ties into question 1:
This slump will continue until people can afford homes!!!

The FL median for home prices probably won't drop that low, but should end up somewhere around $140-$160k when it bottoms. The US median should be a little lower.

3. Will the country go into a recession by the end of the year?

Answer: This answer ties into question 2. If people overspent on housing, then there's less money to spend in the economy. Factor in the people with $42k household incomes that are tied into ARM's right now. If we were to go into a recession, the most likely time would be the 1st two quarters of next year, as the slump continues to wear on consumer confidence and the housing market. It could be earlier (but I doubt it) and it could be later (more likely).