A Moment with Alex
I don't know about you, but I remain confident the nation's economy, along with the whole real estate industry, will start to turn around in 2010 - even though a barrage of statistics says it won't happen until 2012, at least.
First, some basic history notations.
Keep in mind, The Great Depression of the 1930s effectively lasted for 12 years. It ran from the start of The Great Wall Street Crash of October 1929 until the U.S. entered World War II after the Dec. 7, 1941 Pearl Harbor attack by Japan. Four days later, on Dec. 11, Hitler declared war on the U.S.
The Great Depression was the worst economic period in the 20th Century.
Many Talking TV Heads, however, will argue the 1930s Depression began to improve by 1936. I respectively disagree. Not until there was 100 percent wartime employment in the early 1940s did The Great Depression begin to disappear.
New and plentiful jobs erased The Great Depression.
More recent economic fires came with the oil crisis and the inflationary period of 1974 to 1975.
Then arrived the inflation-busting period of 1979 to 1982. Property interest rates climbed to 23 percent. (Some credit-card companies today are charging over 30 percent on certain accounts.)
After the 1979 to 1982 crisis, came the Savings & Loan debacle of 1989 to 1992. Then the slowdown of 2000 to 2002 surfaced.
And finally, the 2005 Real Estate Bubble burst in June 2007, by my accounting. I also flag that date as the start of our Current Depression. We are now into the 30th month, or about 21/2 years of the Current Depression.
The Talking TV Heads are trying to convince us the Current Depression has turned the corner and greener pastures are just ahead.
It sounds encouraging and psychologically uplifting, but don't fall for that line, my friends. It just isn't so.
Here is what I see in my clouded crystal ball:
- Our Current Depression won't be eliminated entirely until 2012.
- Construction jobs will remain scarce in 2010, as developers of new commercial, industrial, retail and residential projects wait and watch White House signals.
- Non-construction jobs will also be hard to find, as employers wait for new orders and new loan applications to be approved by local lenders.
- Florida will continue to lead the nation in record-high unemployment figures for construction and most real estate endeavors.
- New hotel construction will be almost non-existent.
- Home foreclosures in 2010 will continue to climb in many metro markets.
- Southern California will continue to lead the country in monthly residential foreclosure counts. The over-built, speculator-driven Riverside-San Bernardino MSA will again suffer the most
- Right behind California in the high foreclosure column will be Las Vegas, Miami and Phoenix in that order.
- Home prices will continue to drop for most of 2010.
- More people will be in a position to buy foreclosed homes at their reduced prices, but the waiting period for bank loans on non-cash deals will be even longer than in 2009.
- More real estate brokerages will merge and consolidate staffs.
- More brokers will leave the profession and wander into non-real estate jobs or assignments.
- Apartment shortages will be evident everywhere in 2010 and even 2011, as new construction will remain limited in most major markets.
- Most major national retailers will continue to hold off entering new markets as they monitor consumer spending habits in each locale.
- The big-name retailers will also be watching the number of new roof tops that go up before committing to a new location.
- Consumers will continue to shop the discounters more than the high-end merchandise. They will again be guarding their purses.
- Rising inflation will kick in around the end of 2011, as foreigners slow their buying of U.S. debt and interest rates start to jump.
- However, real estate, as an asset class, does extremely well in an inflationary environment.
- So that, at least, is some good news to this Old Grinch-Style Forecast for 2010 and beyond.