Ten Real Estate Predictions for 2008

Posted by: Louis Cammarosano on January 10th, 2008

Real Estate Predictions for 20081. Rents will rise

Due to tightening credit, many prospective homeowners will stop their home searches and stay in their rentals. Defaulting and near defaulting homeowners will look to rent driving up demand, vacancy rates and rents.

2. The 30 year mortgage will become popular again

The proliferation of three year interest only adjustable rate mortgages (ARMS) over the past three years has exposed that such loans don’t foster homeownership, but rather defaults. The realization that taking out an interest only ARM is not buying a home but rather “renting” from a bank without the protection of a lease agreement or statute (why is there a tax break for this type of speculation but not for rent payments?) will lead to the return of the 30 year fixed mortgage.

3. Fallout from the sub-prime crisis will have broad economic and social impacts

In many areas where foreclosures are high, urban blight and crime will take hold. The mess left behind of boarded up homes by defaulting home owners and lenders apathetic about these assets will create “no go zones” in the areas hit hardest.

4. Congress will act!

Congress will have neither the resources nor the inclination to bail out the bulk of defaulting homeowners. They will enact some half measure that will not solve the problem but still cost taxpayers a lot of money.

5. The Fed will act!

As consumer spending should slow down due to the decrease in availability of easy credit, inflation should remain in check allowing the Federal Reserve to make a series of interest rate reductions during 2008.

6. Home prices will be relatively stable in most areas

In the vast majority of areas, especially those where ARMS were not the mortgage of choice, home prices will decline slightly or remain flat.

7. Fewer Realtors®

The number of Realtors has swelled in the past few years lured by the prospect of easy money. As transaction volumes decline in 2008, there will be less work for Realtors prompting many Realtors to throw in the towel.

8. Realtor® commissions will remain stable or rise

The value of a Realtor’s services will become more appreciated in 2008 as it becomes more difficult to sell homes and the time homes stay on market increases. Homebuyers and sellers will enlist the services of Realtors and be willing to pay for it. Top producing Realtors will make money as much money in 2008 as they did in 2007. Indeed, more than half of HomeGain’s Top Performing agents made more money in 2007 than they did in 2006.

9. New business models and entrepreneurs will emerge

What they are, I don’t know. This will be the topic of a future post.

10. The number of companies displaying listings will peak in 2008

In the past few years we have seen over a dozen companies enter the market with the primary goal of being a leading national listing site. To date none of them have become profitable. At some point the economic reality will set in that cool features like displaying listings surrounded by heat maps, social networking discussions and 3-D aerial photos of Bill Gates’ home neither help sell homes nor attract enough advertising dollars to pay the rent and employees.

What’s Your Home Worth? – Try HomeGain’s Free Instant Home Valuation Tool.

Louis Cammarosano



4 Comments on “Ten Real Estate Predictions for 2008”

Pearl Jenkins

I’m looking forward to seeing Louis speak tomorrow at Inman Connect NY “Tea Leaves” session.

Ann Marie Clements

I think that 2008 and will be a wonderful time for Realtors. In first 14 days of 2008 I have been amazed at how many buyers have contacted me through e-mail and have also called me about buying homes. The buying public is starting to realize that this is a wonderful time to buy a home. I am excited about all the opportunity for the Realtors that have decided to stay in the market…..

John Zdanowski

I think your predictions are spot on Louis. Especially the one about tax payers’ money. Keep up the good job running Homegain.

Dave Marron

Here are my additions:

We’ll all finally realize that there are enough Ad Model real estate sites already. Front Door will be the last guest to that party.

By spring or early summer 2008, economists will finally admit that, yes, we are in a recession and have been since about November 2007. Recessions are better than the other negative alternative – inflation. The Fed will pull us out with monetary policy. The hope of a new regime will promise better fiscal policy and we will all prosper as a result.

20% of the Realtors will produce 80% of the transactions – just like they always do. Those that have solid marketing plans will grab even more market share in 2008.

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