With the economy just starting to collapse and a new socialist President that wants to take from those that are successful, I'd say that the economy and the housing market have a long way to go - DOWN!
Based on the results and the large numbers who voted for Obama, plus the world reaction, I think people are so enthusiastic that the economy will around but not that fast because he has a lot of repairing to do from the past 8 years.
Obama has great skill at invoking a sense of hope and inspiration. No question there. I like him for that.
However, according the economists I respect the most (Austrian School), the market cannot escape a correction.
I think we have a long way to go, and may not experience a hint of improvement until the end of Obama's first term. And that is not in housing.
As far as housing, I believe the sentiment for many will get to where it was in the early 90s in California (Don't waste your time on real estate here). I predict that by the end of Obama's first term. Not because of him. Just because we have no choice in correcting.
Though I believe many savvy real estate investors will hold the exact opposite view.
For speculators, and some newer Realtors that so far have only experienced the mid 2000s and think that's how things work, the housing market loses for a long time.
There will of course be those false start reports that come out: "Sales are up!" I don't put much validity in those in terms of a sign of recovery, given the context.
Many, myself included, would like to think that California is Manhattan in terms of real estate - an island where values will always be super high. But it doesn't appear to be true historically. Historically, people leave here until it's affordable again.
Of course no one really knows. Maybe this time will be different in So Cal. According to experienced investors investing here, the party is just getting started.
Typically, when the economy is bad school enrollment rises, so student housing should hold up.
Typically, during a recession, government assistance is increased and extended so low-income housing should hold up.
Typically, a first-term president will work hardest to ensure his reelection, and will put off dealing with the most divisive problems until his second term (if he chooses to deal with them at all, of course).
From us over here in Australia we are grateful for an Obama win because at least he has a policy!
As the saying goes, when America sneezes, Australia catches cold (or pneumonia!) so a plan and decisive leadership is better than the nonsense that we have seen over the last few years.
Our own investment strategy has even been put on hold because of the sub-prime issues in the US and right now we are starting to feel the pain....hopefully the crucible of democracy can deliver on the principles espoused by the President-elect!
I think if Obama does things that cause basic commodities such as gas and food to increase (which I think he will), then the housing market will take longer to recoup.
I personally think the sub prime lending was not the sole cause of the credit crisis and housing burst since according to the data I have seen, the percentage of sub prime loans as a total of all loans is about the same as it was in the 90's and early 00's. The difference with 2006-2008 is that gas prices more than doubled and food cost went up. Thus when your mortgage jumps 1 or 2 points, many people who where already squeezed with higher gas and food cost could not bare the added cost.
If Obama does anything that the market perceives as limiting the supply of gas (stops or eliminates off shore drilling or puts a ban on new oil refiners) or to increase the demand for corn (ethanol subsidies), then this mess will get worse.
My mortgage broker says 1st quarter/early 2nd quarter 2009 should be the worst foreclosure rate since starting in December the largest number of sub prime loans are going to start to reset. After that December 2009 the # of sub prime loans will drop off considerably and things should start to improve.
It will take only 1 hurricane in the gulf to bring $4 a gallon gas back to the US.
One good thing about Obama being president is that he along with the democratic house and senate will expand housing programs. I would normally be completely against extending governments hand in anything. However, as a real estate investor I'm very happy about this. I foresee people getting more rent allowances (such as Section 8) and more government sponsored programs for the "under-privileged." This makes it much easier for us to sell and rent properties. Sure, they'll try to tax me more to pay for them but investors will profit more from the government programs than they will have to pay in taxes.