Real Estate Outlook: Strong Sales Predicted

By Kenneth R. Harney, Realty Times

Will housing outperform the overall economy in 2010 as we pull out of the Great Recession?

Nothing is absolute in the predictions business, but there are solid indications that, yes, housing is likely to rebound more energetically than the overall economy.

Here's why: Even the most bearish Wall Street analysts now concede that home sales are up in many areas from year-earlier levels -- sometimes by extraordinary percentages.

For example, MDA DataQuick reports that sales in the greater Phoenix market in November were 62 percent higher than the year before.

Prices either have bottomed out in dozens of these markets or are close to it. That's because the distressed sales component of local volume - short sales, REOs and foreclosures - has been declining slowly but steadily.

In his latest forecast, Jay Brinkmann, chief economist for the Mortgage Bankers Association, says both existing and new home sales will be higher in 2010 than in 2009 - and 2009 was better than 2008.

No question that a key part of the energy in housing will be the direct result of stimulus efforts by the federal government - especially the two tax credit programs -- that will push sales and even pricing through mid year.

The overall economy, on the other hand, according to Brinkmann, is likely only to grow slowly in the first half of 2010, and not really warm up until the second half.

The heavy anchor dragging on national economic growth -- and on housing demand -- will continue to be unemployment. Brinkmann says that "the time of job destruction is over" in this cycle - that is, the number of new layoffs and new unemployment insurance claims filings are trending down.

But we haven't yet moved into the next phase nationwide - that of "job creation," which may not begin until later in the year, he says, and may be a long, slow process.

The National Association of Realtors' chief economist, Lawrence Yun, sees a strong sales year ahead - up 20 percent over 2009. In some markets, he also expects to see a return to modest and sustained price increases - anywhere from two to five percent on average.

Will higher interest rates put a big dent in these projections? Many economists are forecasting 30 year rates in the upper 5 percent range later in the year.

Those higher rates won't help - but last week they headed in the opposite direction. Thirty year fixed rates averaged 5.1 percent and 15 year rates were half a point below that - both down slightly from the week before, according to the Mortgage Bankers' national survey.

Published: January 19, 2010

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2009 Mortgage Rates

Diane Swonk, chief economist of Mesirow Financial, predicted in late December 2008 that 30-year fixed rate mortgages “could go below 5%” in 2009.

The average nationwide rate of a 30-year fixed rate mortgage dropped to 4.71% on 12/03/09, an all-time record low.

(source: Money, Freddie Mac)

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The Burj Dubai

When the world’s tallest building was inaugurated on January 4, 2010, the record books braced themselves to receive a flood of new entries.
At over 800 meters and with more than 160 floors, here are some of the essential numbers associated with the world’s tallest building:

95 – the distance in kilometers at which Burj Dubai’s spire can still be seen
124 – the floor location of "At The Top, Burj Dubai", the world’s highest and only publicly accessible observation deck with an outdoor terrace
160 – the number of luxury hotel rooms and suites
605 – the vertical height in meters to which concrete was pumped in the construction of Burj Dubai, a world record for concrete pumping
504 – the distance traveled, or ‘rise’ in meters of Burj Dubai’s main service lift, the most of any elevator
49 – the number of office floors, including the 12-floor annex
57 – the number of elevators
1,044 – the total number of residential apartments inside Burj Dubai
3,000 – the number of underground parking spaces
5,500 – the capacity in kilograms of the tower’s service lift
31,400 – the amount of steel rebar in metric tonnes used in the structure of Burj Dubai
28,261– the number of glass cladding panels making up the exterior of tower and its two annexes
15,000 – the amount of water in liters collected from the tower’s cooling equipment that will be used for landscaping irrigation
900 – the length in feet of the world’s tallest performing fountain, The Dubai Fountain, that lies at the foot of the tower
19 – the number of hectares of lush green landscaping that envelops the foot of the tower
12,000 – the numbers of workers on site during peak of construction