You know, there is something to be said for this blogging thing. It is almost calming, now, to surf the web for an hour or so and dip into the thoughts and opinions of folks with a computer, an internet connections and a desire to opine. But every now and again I just love getting a magazine in the mail. Wine Spectator and Forbes are my two current subscriptions. Yes, I can read them online if I desire, but there’s just something about flipping the pages!
So, I’m flipping through my December 25th Forbes and bump into this article by James Grant. While certainly not the rosiest of pictures for the future of the housing market, we only need to look at Michigan for what awaits the rest of the nation.
James summarizes the assesment of Gary Gordon of Annaly Mortgage Management,
The housing downturn will proceed in three phases, Gordon postulates. In Phase I, now under way, home sales will drop to cure what are politely known as “affordability issues.” In Phase II, starting soon, job growth will falter as the pace of lending and borrowing downshifts. In Phase III, lingering into 2008, mortgage lenders will relearn the fine art of saying no. The resulting withdrawal of easy credit will add new downward pressure on house prices and consumer spending.
Hmm….Phase II sounds vaguely like what Michigan is currently experiencing. This may seem a weird way to pull the silver lining out of a seemingly neverending storm cloud, but that means that likely by the time Phase III hits the country, Michigan will primely situated for new dollars to come flowing in!
Currently, Michigan is in the top five across the country in number of foreclosures. We are also in the top five across the country in terms of housing affordability. That means that when the purse strings begin to loosen, it will likely happen here in Michigan before the rest of the country catches on!
From personal experience and anecdotal evidence, investors are beginning to again come back into the market. Just as the robin is a sure sign of spring, so too are investors a sign of a bottoming-out market.