Dave Paladino’s Predictions for 2010

Here are my predictions for 2010

1. Politics will matter to you (and me) - I do not care which side of the fence you are on. You will find that our elected officials with dictate what we do everyday. The health care thing alone is enough to scare the daylights out of me
2. Defaults on mortgage debt will bring about Credit Crunch that has never been seen before. We are now just seeing banks tighten down the lending standards for investment property. Basically if you do not have lots of reserves and a great track record with the kind of investment you are trying to refinance you will not get a loan. Expect to see LTV in the 60- 70% range and DCR in the 1.30 to 1.4 range. And another thing. Forget getting a loan unless you have a relationship with the bank. If you don’t play golf with him/her on a regular basis, you are not going to get a loan. See my previous post
3. Consumers will become incredibly educated about everything. See the thrift paradox below. As part of this consumers will use the internet to study every decision they make
4. The Thrift Paradox will take hold. Americans used to be the sky is the limit. See Walmart and dollar general doing better. Heck even garage sales will become more popular I would expect luxury goods to be harder hit. Staying at the Marriott is out, camping and staying at super 8 is in.
5. People will begin to act their wage. If you make $15 an hour you will start living the lifestyle of someone making $15.
6. Banks appraisers and investors will come to a meeting of minds of what things are worth
7. Increased taxation will reduce the desire to spend and earn. Americans will be less and less likely to want to earn more. The capital gains tax is sure to go up. Meaning that it may be better to take the tax hit now vs. later. With the advent of Craig’s list there is little or no reason to by a new vehicle unless it is for work purposes.
8. People will move in together, with tough times you will see multiple generations of families living together. You already see this on the east coast you will see that more in Omaha. People will pile into apartments and houses to make ends meet
9. High inflation will occur or at least there will be mounting pressure on inflation. This is a hard prediction because there is so many things that the fed will and can do to control inflation. But it will be nearly impossible to stop inflation if consumers are the ones driving it.
10. House prices will fall considerably. I am going to start short of saying that will bottom out. But there price curve will start to flatten. See #1, the government will do a lot to keep the prices of homes up.