January 28, 2008
RE: Monthly Letter + 2008 Gold Report
Dear Client;
Welcome to 2008. The year ahead looks to be an exciting one filled with challenges. With food and energy costs soaring at the same time that housing activity and home prices have plunged, our economy will be threatened by stagflation (which I wrote about last summer before the liquidity crisis!). Expect the CPI to rise to 4% (from 3.5% last year). This is going to be a year that investors, tenants and brokers will be required to put all of their experience to work!
I find it highly ironic that 2008 is the Chinese year of the Rat. Quite appropriate given our election year! Although, being an election year will make for lots of rhetoric. The uncertainty of politics in Washington are bound to cause slowdowns in many peoples decision process as they await a direction and a verdict.
We continue to see fall out in the F.I.R.E. (Finance, Insurance and Real Estate) industry with spill over affecting home furnishing and home improvement tenants in the second half of last year. The question this year is how much further, if at all, will it spread. Keep a good eye on food retailers and restaurants. Their ability to pass through increased costs or not will be an early indicator of trends to come. The key concern I have is that even if you are not selling your house, the feeling that it is worth less may dampen the enthusiasm of the consumer – which will hurt retailers.
What amazes me the most is that if you were to awaken from a long slumber and not read the newspaper and were to hear the following stats, what would you think?;
- Mortgage rates at 6%
- Housing – most affordable in 20 years
- Unemployment below 5%
- Gas adjusted for inflation at or near historic lows (you take $1.25 x 3% a year for 20 years).
- China and India’s population and economies awakening.
- The U.S. was just chosen as the most innovative nation in the world.
- The war in Iraq is nearing its end.
- 95% of Americans believe in God.
I don’t know about you, but I’d kiss my wife, buy a lottery ticket and be giddy. It is amazing how the press focuses on the “half empty” part of the glass.
Well, with the storm clouds gathering and you wondering which way to be sailing, I am pleased to announce our 12th annual edition of The CDC Commercial Gold Report.The Perfect Storm.Helping you connect the dots. (Click Here to Download now) This is our annual forecast report and I hope you enjoy reading it as much as I have writing it for you. I will be presenting the report and my outlook for 2008 to several clubs and organizations in the coming weeks and would be happy to present to your club, group or organizations. Give me a call to schedule.
Wishing you a happy and mutually prosperous New Year.
Regards,
Don
Don Zech
CDC Commercial
Real Estate Services
