Interestingly, the National Association of Realtors predicts a gradual recovery during the second half of 2008 as the mortgage situation improves.
I’m sure we would all love to see a recovery before the end of the year. But that remains to be seen given the current mortgage climate where more than 120 mortgage lenders have either filed bankruptcy or closed their doors all together.
We have seen home prices drop in most major markets with sales activity at its lowest level since at least the late 1980’s – around the same time the Savings and Loan Fraud Crisis hit its peak.
Today, market indicators show us the following:
The 30-year fixed-rate mortgage, which has moved erratically in recent weeks, is expected to hover around 5.8% most of the year, and then rise to an average of 6.3% in 2009.
Growth in the U.S. gross domestic product (GDP) should be 1.5 percent this year and 2.4 percent in 2009. The unemployment rate is projected to average 5.4% in 2008 and 5.5% in 2009.
Inflation, as measured by the Consumer Price Index, will probably be 3.2% this year and 1.5 percent in 2009. Inflation-adjusted disposable personal income is expected to grow 1.4% in 2008 and 3.1% next year.
Will we see a recovery in 2008? Time will tell. With a swift clean up in the mortgage industry, continued low interest rates, and a small boost in consumer confidence, we may see some light at the end of the tunnel this year for real estate investing success.