Posted by: union03g | July 26, 2009

Thinking Ahead To The Winter: A Perfect Real Estate Storm

Now that we really beginning to enjoy the heat of summer, I wanted to take a moment to pose a hypothetical for this coming winter. I am always forcing myself to do a worst-case-scenario analysis of the future, just to protect myself. In my opinion there is a strong possibility of a perfect storm headed our way. If the below events all hit together this winter, then we are in for some damage.

  • Winter real estate sales weaken with the normal seasonal cycle
  • Forclosure Moratoriums get lifted all over the country
  • Federal tax credits for first time buyers get pulled
  • Mortgage rates creep up to the historic averages of 6.25% or higher (they are around 5.25% now)
  • Chicago developers continue to finish and deliver condos that were started before the fall of 08
  • Oil prices go to $80 with seasonal adjustments, gas prices rise
  • Cutler breaks toe

Chicago is in better shape to weather this kind storm (as we always are) than the coasts, but it will still sting. Other guesswork for this winter:

  • Chicago will win the Olympics and it will become an important beacon for our city and push huge public works projects downtown (beautification of south Michigan Ave).
  • California will be in dire straits as an economy. Cali will begin legalizing and taxing the harvesting of medicinal pot across the state or selling contracts to deepwater drillers to save themselves.
  • Miami/Naples will see Chinese REITS buying up condos en masse as they speculate the bottom and continue to own us.
  • Residential homebuilders will bottom
  • Everyone will become an expert in commercial real estate as it will now consume CNBC

Just hang in there, we will get through this and be stronger for it.



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