Recovery in sight

A group of the nation’s leading economists gave a mostly upbeat forecast for the housing market at an NAHB conference in Washington, D.C.

Agust of positive news arose from the National Association of Home Builders' (NAHB's) spring conference in Washington, D.C., compliments of Mark Zandi of Moody’s Economy.com. The April 23 presentation, one of several forecasts from leading economists from Freddie Mac, Fannie Mae, Harvard University’s Joint Center and Karl Case of the Case-Shiller Index, made a strong case for a bottoming of the housing market in the current quarter -- Q2 of 2009 -- followed by declines in unemployment and rises in home prices.

“[Housing starts] are bottoming around now. By the end of this year, things should begin turning around,” said Zandi, the chief economist and forecaster for Moody’s Economy.com. The former advisor to both John McCain and Barack Obama based his predictions on a number of factors, among them the current oversupply of housing inventory; improved housing affordability; and the current administration’s mortgage rescue and financial stimulus plans.

Bernard Markstein, director of forecasting for the NAHB, agreed that “[housing starts] are bottoming now and, by the end of the year, things should begin turning around.”  Some areas of the country, such as the upper Midwest and the Great Lakes region, are “still feeling the pain” and may continue to do so for some time to come, Markstein warned.

The housing market should return to normal in 2011 or 2012 -- normal being defined as the average number of housing starts in the 2000 to 2003 time frame, according to Markstein, when the starts rate hovered around the 1.6 million mark.

Eric Belsky, executive director of the Harvard Joint Center for Housing Studies, struck a more sober note when he warned that unemployment will take a long time to recede. Until then, it will exert downward pressure on housing demand. The reduced access to mortgages -- wealth and down payments are two current “constraints," he said -- will also affect sales.

“While interest rates are lower, there’s sharply less credit available,” Belsky said. “A lot of people are not going to have the availability to buy homes.”