Fall/Winter Market Predictions - 09

[G Simpson]

Well I think most of us have seen an uptick in number of sales in our communities in the past few months, some communities have even had some form of appreciation from the bottom that seemed to occur in Arizona somewhere around april/may of 09.

My question is what do my fellow investors see happening in the latter part of 2009...are the buyers going to fade back into the woodwork....is the so-called shadow reo inventory going to show its ugly head....are we going to have further declines or is it positive from here. Thx in advance

[Tony Tomasek]

I would say that supply will probably widen a bit during the off season, and there will be a wider selection of decent deals for a few months, but in general the banks have gotten smarter. They ARE holding a "shadow inventory" at least in Indianapolis but will not flood the market if at all possible. That would be contrary to their best interest. They are holding these as best as I can figure since it now hurts less on the old balance sheet since accounting principles have been changed.

To put it simply, I expect conditions to be about the same until about late 2010 at least. Barring inflationary pressure that is.