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Government programs haven't done much good - nor are they likely to, according to Leslie Appleton-Young, chief economist of the California Association of Realtors, who released a fairly bleak housing forecast for 2011. "There really isn't a kind of magic bullet," she told reporters. "There's been a lot of government programs thrown at the market, but it doesn't appear anything's going to stick and be as effective as just the time and healing that takes place." It's worth pointing out that it took more than five years for the housing market to recover from the 1990-1991 recession - and economists have indicated that this time would be at least as bad, if not worse. Still, the numbers do sting. The CAR expects sales and prices increase next year by 2 percent, but that's still below 2009 levels. From CAR press release:
"A lean supply of available homes for sale will drive prices up at the low end, but larger inventories and limited, less attractive financing will cause continued softness at the high end," said Appleton-Young. "There's some indication that lenders will accelerate the number of foreclosures coming on market, further adding to the housing supply, but we do not anticipate that lenders will flood the market with distressed properties," she said. "The wild cards for 2011 include federal housing policies, actions of underwater homeowners, and the strength of the economic recovery," said Appleton-Young. "What is certain is that favorable home prices and historically low interest rates will continue to make owning a home in California attractive for those who are in a position to buy," she said.
One imponderable in making forecasts is the number of homeowners who walk away from their mortgages. If the number grows, as some expect, it would put a substantial drag on the market.
Mark Lacter created the LA Biz Observed blog in 2006. He posted
until the day before his death on Nov. 13, 2013.