Fall Forecast for the Housing Industry

Thanks to a recent article from Big Builder magazine, we have updates from the 2009 Annual Fall Forecast Conference, which discussed what is in store for the building industry for the rest of 2009 and early 2010. The conference was well attended, probably because everyone in the real estate industry is hoping that the worst is behind us and wanted such confirmation from an expert economist. The good news is that they got their confirmation!

The Big Builder article highlights four key points that were worth taking away from the conference:

• The main topic that encompassed the entire meeting was, of course, the economic downturn and the effects it has had on various aspects of the market. Well, the good news is that by the end of the meeting a general consensus had been formed deciding that the crash is finally being over.
• Recovery of the economy seemed to be a hard topic to decipher. There were many mixed conclusions. While speaker Mark Vitner chose to describe the recovery process as “slow and agonizing,” Mark Zandi gave a different outlook. According to him, studies show that the more severe the decline in GDP is during a recession, the better the chance of high job growth during recovery. With the differing results, it can at least be said that we are not really sure what to expect from the economic recovery.
• Another topic that received a lot of attention was of mortgage markets. Although interest rates have been at historical lows, presenters said it was basically a done deal that in 2010 interest rates will start to rise.
• As with many topics of the meeting, there were a variety of forecasts for housing. Economists were troubled by vacancy rates and inventory levels. With excess inventory and foreclosures looming ahead this means that price declines will continue. Zandi estimated that home prices have another 5% to 10% to fall before they will stabilize again.

This is just a brief overview of the NAHB fall forecast conference, and we recomment checking out the Big Builder article for more detailed information. However, we can all be happy that the major issues of past years are firmly behind us, and we are beginning to recover.