The Future Looks Grim, So Sayeth Carole Rodoni

If you are looking for someone with a strong opinion about the economy and real estate, then look no further than Carole Rodoni.  Her leadership and statistical analysis of the economy and how it affects real estate makes her opinions extremely valuable.  Yesterday I spent nearly 2 hours in a room with 500 other curious minds to see what Carole had to say about Bay Area real estate and our economy, what went wrong last year, and what the future holds.  Here are some of the key points I took from the event.

The Economy 2009
*GDP: -1.9%
*Unemployment: 9-10%
*Inflation: 1-2% (Mild)
*Interest Rates: 2% by year end
*Oil: $40-$45
*Dow: 8000 – 9500
*Recession: won’t end until beginning 2010

Real Estate 2009
*Prices will decline another 8-10%.
*Foreclosures will continue to rise, especially in CA, NV, AZ, FL.
*Sales will be up 30-60% in foreclosures and first time buyer areas, sales will decline 6-10% due to loss of wealth, jobs, and buyers.
*Commercial real estate, especially malls and office buildings, will decline 10-20%.  Inventroy will grow 10-20% and loans will be harder to get.
*Lower home mortgage rates will stay low and the government will help, but only for $417,000 conforming and below.
*Jumbo loans will still have 6.5 – 7.5% rates, need significant down payments, and at least 700 FICO score.
*New home prices will continue to decline another 10 – 15%.
*The bottom of the real estate market will vary by area.  Some will bottom by the end of 2009 by going back to 2000 prices while the more distressed areas will not reach the bottom until 2011 as prices need to go back to 1997-1998 prices.

She also said that it is a great year for first time buyers–more affordability, low interest rates, and declining prices.