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2008 Outlook: As Wachovia Sees It

By: Brad Nix, Managing+Broker
Posted: December 20th, 2007
Category: Real Estate News



I have a great resource and wonderful business partner in David Bell at Wachovia.  They have great loan products and excellent business services for commercial real estate buyers and tenants.  As a trusted partner, David Bell provides the Wachovia "outlook" on a monthly and occasional basis.  Today he sent me the following forecast/outlook for 2008:

"Each month I send out Wachovia’s monthly economic outlook with some highlights and comments.   This month the report is our 2008 Annual Outlook for the Economy.   This document is 20 pages long and I have opted to provide a link for to read vs attaching to this email.   As usual, I have provided highlights.

Simply select the link above and you can read the details.

Executive Summary

.. The outlook for the national economy continues to depend upon how well the
consumer navigates through four major headwinds: the housing slump, rising
energy costs, a tightening credit environment, and a weakening job market.

The American Consumer

.. Consumer spending will slow, but not collapse in 2008, as job and income
growth underpin continued gains. Despite slower average employment gains in
the coming year, job growth should be sufficient to produce wage and salary
gains of around five percent.
.. The slowdown in consumer spending coupled with steady income growth
means that income growth will outpace spending growth for the first time in
five years. As a result, the saving rate will rise.
.. Growth will not be uniform, many areas will face sharper declines in home
prices, and these adjustments will weigh heavily on local economies.

Housing & Residential Construction

.. Housing will continue to decline into the new year and we do not expect any
meaningful recovery on a national basis before the end of the decade. Many
areas are facing longer workout periods.
.. Prices need to decline as much as 20 to 30 percent in markets such as California
and Florida, where the run-up in home prices has created severe affordability
issues for potential residents. Nationally, prices will need to decline only 10 to
15 percent from peak-to-trough.

Interest Rates

.. The Fed will need to cut the federal funds rate twice more in the first quarter.
Recent actions suggest the Fed is committed to ensuring liquidity and the
stability of global money markets. However, with renewed growth in the U.S.
economy and lingering concerns of inflation, the FOMC will be in a position to
begin tightening by year-end.
.. Treasury yields will remain range-bound in the coming year, and newfound
steepness should remain in the curve in the coming year.
.. The Fed’s coordinated action with other major central banks may not be a cureall
for the credit market problems, but it was certainly a step in the right
direction. We look for LIBOR-to-Treasury spreads to narrow after the year-end
pressures subside.

The Dollar

.. The Dollar may have reached a bottom in its five year slide recently. It should
begin a slow move higher against European currencies by the second half of
2008, when foreign central banks will be easing into the face of renewed Fed
tightening. However, we look for the greenback to depreciate further versus
most Asian currencies. "

Thanks David for providing our readers/web viewers with a macro-outlook for 2008.  On a local level , I do expect the real estate market to recover sooner than California and Florida.  It is obvious that Metro Atlanta has never experienced inflated appreciation.  Therefore we will not be as slow to recover as other beach and over-inflated growth ares will be. I expect Metro Atlanta to stabilize by 3rd Quarter 2008 and begin a new growth phase in 2009.  In other words, NOW is the perfect the TIME TO BUY REAL ESTATE in Metro Atlanta.  It may not be a great to sell, but things will change will sooner than the national market as job growth is steady, interest rates are low and Atlanta continues to have one of the lowest cost-of0living factors in the country.

If anyone is considering purchasing commercial real estate in the I-575 Corridor of Cobb, Cherokee or Pickens County, please consider David Bell for your finance resource.: David Bell, Business Banking Manager, 678-627-3716.

This entry was posted on Thursday, December 20th, 2007 at 8:58 am and is filed under Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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