2010 Forecast
So what will 2010 bring you ask? It remains to be seen what long term effect current policies will have on mortgage interest rates; it is very dependent on how well those policies work, how quickly we can burn through distressed inventory, and what happens if/when inflation kicks in. For certain we are in unprecedented times, so what we see today could be different tomorrow as World events (economies, terrorism, etc) now affect our markets more than ever before, and will continue to do so.
My predictions? Interest rates will likely remain low for the immediate future, especially since Fannie & Freddie have essentially been Nationalized; you & I are subsidizing low interest rates in hopes of stimulating the housing markets. Beyond about 6 months from now much could change. The short term trend over the past 30 days has been upward however, but overall, still very low.
There has been an amazing recovery of the U.S. dollar’s exchange rate against the currencies of most other major economic powers. According to information I received from B of A, as of last week, the dollar had regained all losses against those currencies since September of this year. What has fueled this resilient strength? The primary force is a belief that the economy is moving toward an increasingly sustainable recovery. This belief has had its ups and downs in recent months, of course, creating something of a roller coaster ride for interest rates (within a relatively narrow channel) and for commodity prices.
But there is more at work here. The unavoidable issue, even for those who have been certain that the dollar would continue to lose its exchange value, is that many foreign currencies look far worse than does the dollar and their countries’ economies appear to be far more tentative than ours. By contrast, the U.S. economy looks relatively strong.
Housing values, and an overall rebound in the housing market will occur…but when? Again, distressed inventories are affecting this big time, so much will depend on that. One thing is certain; every down-turn in the US economy has been followed by an up-turn; often the actual up-turn is in proportion to how bad the down-turn was. If that holds true we should see a better 2010 than 2009 in housing, followed by another increase in 2011, and again in 2012. I personally believe we will not return to boom times anytime soon, and hope for a slow and steady, sustainable, long-term recovery.
I hope this provides some assistance to you as we go forward into another year of a market that promises to be interesting and challenging! As always, if you or anyone you know is looking to Buy or Sell a home in Central Oregon, please feel free to give me a call at 541-923-3853.
Here’s to a better year for us all, and please enjoy a Happy & Safe New Year!