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Kai Ryssdal: Brace yourself for this one, it’s not something you’ve heard too much of lately. There might be good news on the housing front. Economists at the National Association of Realtors predict home prices will rebound modestly next year. And so will new home sales.
Here’s the but — ’cause you knew there was going to be a but with an introduction like that. The rebound’s not going to come until after the first nationwide home-price decline in 40 years plays itself out. Marketplace’s Steve Tripoli has the story.
Steve Tripoli: Realtors Association economist Lawrence Yun says the current slowdown is planting the seeds of next year’s recovery.
Home builders are suffering right now. But Yun says that means they’ll slow construction and remove the excess inventory that’s depressing prices. He says new buyers are moving into the pipeline, too.
Lawrence Yun: We have seen rising apartment rents, so that is beginning to squeeze those people who are renting. Also at the same time, we have seen rising mortgage purchase applications.
Add a strong job market and Yun says that means potential buyers are positioning themselves to make a move.
But Wellesley College housing expert Karl Case says this is the most uncertain housing market he’s ever seen. Case ticks off this downturn’s unique mix of pros and cons:
Karl Case: There’s no recession this time, and we have low interest rates. We have the subprime debacle, which we didn’t have last time. And there’s a big psychological dimension — after years and years of rising prices, people are worried about this bubble bursting and are being cautious.
So, is a housing recovery lurking in all that somewhere?
Case: If you continue to have employment growth and the economy doesn’t go into recession and rates stay low, the demographics are not great, but they’re not terrible either. And people are postponing and waiting.
But that’s three big “ifs.” Case can also rattle off factors that might derail a recovery.
Case: We don’t know how this subprime thing’s gonna turn out. We don’t know how much of an impact builders liquidating these inventories is gonna have on price.
And those two might in turn squeeze consumer spending, which wouldn’t encourage much house-hunting. So if you’re looking for certainty on what’s coming next in housing, the economists are saying you can’t have any.
I’m Steve Tripoli for Marketplace.
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