Many Economists Say Slowdown Is Not Over Yet
Today’s real estate news industry is saturated with reports and predictions on the future of our housing market. Everyone seems to have their opinion on what is going to happen to housing in the near future.
Right now, there seems to be just about an equal mix of optimists and pessimists out there.
One new report just released suggests that most economists, analysts and industry insiders believe that the housing slowdown is far from over yet.
A February 4, 2007 article by Barbara Hagenbaugh of USA TODAY, “Most agree: Housing crunch isn’t over yet,” discusses how most professionals believe there is more slowing for most of America’s housing market.
The state of the housing market in relation to the future looks to be a hot debate that will only be settled when the actual numbers come in. Until then, it is a lot of speculation and predicting.
“Housing is proving to be one of the biggest wild cards in the economy in 2007 as analysts are deeply divided about whether the worst in the downturn is over or there is much more pain to go.”
“Only 9% of economists say the housing decline ended in 2006, according to a USA TODAY survey of 55 economists taken Jan. 18-24. Another 42% said the downturn will end in the first half of the year, and 45% said housing will bottom out in the second half.”
So, most of those surveyed believe that we will continue to see symptoms of the housing slowdown well into 2007, including increased inventory and home prices and values falling in some areas.
But many people still want to know exactly when the market will bottom out and then begin to flourish again like we saw during the housing boom.
“‘This is one of those hot-button issues,’ says Christopher Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi. He estimates the downturn ended last year. ‘I don't know why people are so pessimistic.’”
“When housing bottoms out is key for the economy. Thus far, the fallout has been small. The economy grew at a faster pace in 2006 than in 2005 even though sales of previously owned homes fell 8.2%, the biggest drop in 17 years, the National Association of Realtors says.”
The reason why knowing when the market will bottom out is so key is because many economists are worried that the overall economy will not be able to stand up to much more slowing, and will soon be negatively affected.
So far, we have not seen much economic impact, but economists do not think our economy can take much more negativity for that much longer.
“But the economy may not be able to shrug off further declines, A.G. Edwards & Sons chief economist Gary Thayer says. Lower energy prices and a strong job market have thus far helped consumers weather the housing downturn. But going forward, those two factors may not be big enough to offset further weakening, Thayer says. ‘Seeing things stabilize and hearing reports that housing is stabilizing is good for consumer confidence,’ he says.”
Only time will tell which predictions are right.