A year ago, we looked at the impending fall in the Real Estate market and how the Case-Shiller futures were predicting much more downside. An update on that futures market is not any prettier.
Interestingly, while the futures at the beginning of 2008 predicted further pain, the were WAY off in predicting how much.
- The Los Angeles futures for instance were indicating the index being around 200 at this point in time. We are actually 15% lower with the index at 170.
- Chicago was going to stay above 150. It is now down in the 130 range.
- San Francisco would stabilize around 175 for a year or two. We are now down below 130.
It has been ugly, folks. The futures do predict more downside for 2009 through 2012. Unfortunately, due to the liquidity of the markets, I trust them even less now.
Personally, I think 2009 could be even worse than 2008. How could it not be? Unemployment is 5% higher already and the stock market is 50% lower. People have less cash to purchase food, let alone a house. Leverage is drying up rapidly and the ARM resets are starting in the Prime and Alt-A mortgages now.
The only thing that could delay a major fall in real estate in 2009 is this this Cram-Down bill that just passed Congress. Of course, that will only delay and magnify the impending collapse of capitalism as we know it.
(click image for ginormous view)
This graph takes into account the historical data through Dec 2008 and then the CME futures prices out to 2012.
*data source: bloomberg, cme.com
No related posts.
I hope everything will be successful in the real estate business in the coming year.