The economists agreed that the problems with home finance markets will continue to hit housing into next year, and that even when there is a recovery, it will be a slow process that will see weakness continue into 2009.The economists were surprised at how bad it is? What world are they living in? The savings rate is negative, personal debt is at an all time high and home affordability at an all time low. Subprime loans were the perfect teaser to keep the housing market sizzling. The problem is too much sizzle usually leads to a burn. The housing market could be charred beyond recognition.
While most said they believed the overall U.S. economy can weather the housing downturn, several saw significant risk of a recession. Mark Zandi, chief economist of Moody's Economy.com, said that large areas of the country will fall into recession, if they haven't done so already.
The economists also admitted to being surprised by how bad the housing downturn has become, and all said that making forecasts of a recovery is difficult due to the problems in the credit markets.
"This time, we just don't know how it's going to pan out because the securities markets have become so much more important," said David Seiders, chief economist with the builder's trade group.
Wednesday, October 24, 2007
Home Builders: Worst Is Yet To Come
The battered markets for real estate and home building still have farther to fall, according to a range of economists who spoke Wednesday at a forecast conference sponsored by the National Association of Home Builders.