Will 2010 Surprise Us with a Strong Economic Recovery?
Posted on Mon, Dec 07, 2009
When the Talking Heads on television news say that our economic recovery in 2010 will be flat and protracted everyone nods their head…What would you say if I gave you a forecast that the US will exceed government growth projections by 100% ?
OK…it’s been suggested in the past that I was dropped one too many times as a baby…and that may be true…but this time I have substantial evidence from a leading economist that we’re in for a much stronger period of growth in 2010 than the media is forecasting.
Over the weekend there was a great article in the Wall Street Journal, by James Grant…including some historical information about recoveries from recessions that I had never seen before…and want to share with you. Mr. Grant is well respected in economic circles…and apparently, much better educated than most in the history of U.S. recessions, and the following recoveries.
I’ll leave the article for you to read…please do, it is one of the best written pieces I have seen for a long time…but here is the “Executive Summary”:
- Every past recession has been followed by a period of rapid expansion in the economy
- Low cost of money is fueling rapid stock market growth, and industrial investment
- Employment, and inventories are at historic lows…and consumption is increasing
All of this points to a fast climb out of the economic ditch we find ourselves in at the moment.
What does this mean for homeowners and home buyers during 2010?
If Mr. Grant is at all correct…and there are several other recent articles suggesting that last Spring was the “bottom of this present recession…we are already reaching the recovery phase. Historic lows in inventory and historic lows in the value of the dollar mean increasing factory orders and increasing employment.
We have seen home price increases in our local North San Diego County area for each of the past eight months….averaging over 1% for seven months in a row….think about that for a minute…seven months times one percent….Seven percent growth in price in less than 3/4 of a year!
Put that in perspective…what’s the best rate you can get on your money at a bank?…..Maybe 3%….housing is beating the pants off any investment you have at a bank…even counting the associated purchase costs…is this starting to sound familiar?
Always one to say “I told you so”…I can’t resist the temptation to do it again….and here’s the Good news…there are still lot so of opportunities out there right now…more than you can count…for investors or first time buyers. Existing homeowners….who have equity…are also starting to move to better locations, better schools, shorter commutes…and lower property tax situations.
Stay tuned for more information…I’ll be putting out several more posts in the next two weeks that should surprise you with news about short sale changes, local housing inventory numbers, and market situations that you just can’t find anywhere else!
Take Care