When it comes to predicting the direction of the housing market, there is no shortage of opinions. Below you’ll find excerpts from “The Soothsayers” section of my forthcoming e-newsletter, Realty Digest, which I write every two weeks. My next newsletter will be issued around noon on Friday, Nov. 4.
Take your pick from the excerpts, draw your own conclusions and forward your comments to this blog:
- Housing starts will increase by 36 percent next year and the housing sector will contribute to economic growth for the first time since 2005, according to the November survey by the National Association of Business Economics.
- First American CoreLogic predicts continued declines in most markets, albeit at a slowing rate, for the next six months, followed by a rebound in the spring.
- Harvard economist Edward Glaeser doesn’t foresee property values rising to previous levels even in attractive locales. “The harsh reality is that real estate prices that go up come down. I’ve found that for every real $1 increase in local market prices over a five-year period, prices go down 32¢ over the following five years,” Glaeser says.
- While 73 percent of prospective purchasers surveyed by Move. com expect their properties to appreciate 10 percent or more in five years, 28 percent expect their purchases to appreciate 20 percent or more during that same investment horizon. Almost a quarter of the prospective purchasers said they believe prices are as low as they will go.
- Ian Shepherdson, chief U.S. economist at High Frequency Economics, doesn’t anticipate an increase in mortgage rates until the spring of 2011 because of Fed actions: “I would be astonished if they raised rates in the heart of the credit contraction storm. The credit contraction will last for a couple of years, and if the Fed is interested in offsetting it, they will have to buy assets through next year.”
- Keith Gumbinger, a vice president at financial publishers HSH Associates, predicts that the end of Fed intervention will push rates up about three-quarters of a point to somewhere in the mid-5 percent range. By late 2010, he forecasts, the rate will be closer to 6 percent.
- “Many buyers have been rushing to beat the deadline for the first-time buyer tax credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November,” sys Chief Economist Lawrence Yun of the National Association of Realtors (NAR). “With such a sale spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer.”
- For his part, Toll Brothers CEO Robert Toll said he’s optimistic about the industry’s progress: “The new home market is improving. We sense that it is, though slowly and through choppy waters.”
- “Still, as inventories continue to decline and balance is gradually restored between buyers and sellers, we should reach self-sustaining housing conditions and firming home prices in most areas around the middle of 2010,” says NAR Chief Economist Lawrence Yun.
What does your crystal ball reveal?
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022