You Don't Know

Everywhere I go, people ask me about the Real Estate Business. How’s the market? Have prices bottomed out? When will they bottom out?

You’re about to see a change in the market alright. Watch for headlines of how much foreclosures have declined next year. Foreclosures will decline, and hugely I might add.

Why? Because the loan modification program from the Fed’s is in full swing now, and within the next few weeks the Fed’s short sale program will be in full swing as well. I’ve blogged about both programs and have said for almost two years that Short Sales were the best answer to the housing mess.

The questions about when we will bottom out in the housing industry are contingent upon a few other things. The most obvious is the percentage of re-defaults on the loans that are modified. No one knows how many will re-default, or how fast homeowners with modified loans will do the math.

An interesting study I read over the weekend was about the growing number of homeowners with high incomes and high credit scores that are walking away from their homes and mortgages just because their evaluation of the cost benefit of staying in their homes is upside down.

Another question I don’t know the answer to is, what will the interest rates do over time? I’d say they will go up, how far up is anybody’s guess.

In the Inland Empire, the big question is unemployment. How high will that go? All of our local county and state governments are in the straights for cash and income. All public agencies in California have no clue about cutting back. They can only think of ways to increase income (that’s another topic for another day).

I think the Fed’s should look at regionalization in the Housing Stimulus area. If California, Florida, and perhaps a few other places like Las Vegas, Phoenix, and Detroit are the real problem, then take a look at regional incentives in lieu of a one size fits all.

My Grandfather, who was my male influence as a youngster, taught me the answer to such things. He always said, “YOU DON’T KNOW ----- WHAT YOU DON’T KNOW.” I think Grandpa is right again.