Before I make any bold guesses about 2008, here's what I said one year ago:
"I think the big 2007 housing story will be the rising foreclosures and bankruptcies due to ARM adjustments. I also think at least one, or possibly two major mortgage lenders will collapse due to forced buy-backs and increases in default. Ameriquest is my top choice, but Countrywide, Washington Mutual, and H&R Block (Option One) are top contenders."As you can see, I was completely right about the big story of 2007. As for my other prediction, I was way off the mark. Sure, Ameriquest and Option One are out of the underwriting business, but so are over 200 other companies. Not exactly "one" or "two". :) My record, therefore, stands at 50%.
With that in mind, here are some
- At least three publicly traded house builders will go bankrupt.
- Countrywide Financial will be out of the origination and underwriting business.
- There will be a run on Washington Mutual. No prediction on whether it fails or not.
- Fiscal crisis at the state and local level as tax revenue declines and bond funds dry up.
- Unemployment in California will reach 6.5%, and 6.1% in Sacramento.
- SIT losses in the four-county area will reach $1 billion at some point during the year.
- The FIT will return as banks begin to liquidate in order to raise cash.
- There will be a dead-cat bounce in Sacramento real estate this spring, resulting in one or two months of appreciation. This will quickly reverse itself by July, and by September record price drops will resume.
Happy New Year, everyone, and thanks for continuing to support this and the other fine blogs in the Bubblesphere. See you in 2008!