Friday Facts December 7, 2012

FRIDAY FACTS

December 7, 2012

 

Sound bites from the National Association of Realtors Conference – Economic Issues and Residential Business Trends Forum – Mark Vitner, Senior Economist for Wells Fargo.

  • Fiscal cliff is coming – regardless.  Expect that Bush tax cuts will be extended for all those making under $1million.
  • If they don’t reduce deficit by at least $1 trillion, US credit rating will be dropped 1 or 2 times in the next few months.
  • Mortgage Interest Deduction will be restricted
  • Obamacare taxes will go into force January 1st.  Social Security taxes will go up 2%.  Add all together and .9% will be taken off growth.  Hopefully, after a time, growth will return to 2%.
  • Improvement in economy has been slow, but steady.
  • Mortgage rates will be lower later this year and early next.  2/3 of the Federal Reserve governors believe rates will remain low through 2015.  He doesn’t think these rates are sustainable and will have to be raised sooner than that.
  • Employment.  Jobs lost won’t be replaced until 2015.
  • Homes get sold when confidence reaches a certain level.  Expect to get there by 2014.  Housing will strengthen.  It will be better in 2012 than 2012
  • Increase in single family construction.  Haven’t yet cleared the distressed pipeline but a lot of what’s left isn’t prime and doesn’t compete with new construction
  • Outer suburbs were created because of price increase.  Now, people don’t want to live there.
  • Home prices have firmed recently as foreclosures have become a smaller portion of overall sales.  Prices will likely fluctuate along a low trajectory until foreclosures decline
  • Global economy – nothing good coming out of Europe.  Have to jettison the Euro.  Probably won’t happen for 10 years.  They’re still in denial.
  • There was a Q3 slowdown in both residential and commercial.
  • Is the light at the end of the tunnel an exit or an oncoming train?

 

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