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Ten Economic Questions for 2013

Here are some questions to think about…

Bill McBride or CalculatedRiskBlog.com raises some interesting questions for 2013.  Below are the four most related to real estate, and click the link below for a full list.

1) US Policy: This is probably the biggest downside risk for the US economy in 2013. I assume some sort of fiscal agreement will be reached soon, but how much austerity will be included? What will happen with the Alternative Minimum Tax (AMT)? What about emergency unemployment benefits? What about extending the mortgage relief for debt forgiveness (important for short sales)?
And what about other policy in 2013 such as the “default ceiling” (aka debt ceiling)? In 2011, the threat of a US government default slowed the economy to almost a standstill for a month. Right now the White House is taking the Ronald Reagan approach (when the Democrats pulled a similar reckless stunt) and they are saying President Obama will only sign a clean debt ceiling bill. Good.  Hopefully default is off the table, but you never know.7) House Prices: It now appears house prices, as measured by the national repeat sales indexes, bottomed in early 2012? What will happen with house prices in 2013?
8) Housing Inventory: Over the last few years, we’ve seen a dramatic plunge in existing home inventory. Will inventory bottom in 2013?9) Residential Investment: Residential investment (RI) picked up in 2012, with new home sales and housing starts increasing 20% or so.  Note: RI is mostly investment in new single family structures, multifamily structures, home improvement and commissions on existing home sales. This still leaves RI at a historical low level. How much will RI increase in 2013?

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