Who Can Make the Sun Shine? The Zandi Man Can
One of the guys that said the bottom was going to fall out of the housing market four or more years ago is now saying the bottom is just around a very unnerving bend or two.
Zandi Man
Moody’s Economy.com chief economist Mark Zandi presumes “strong actions by policymakers” are at hand, and will play a role in a market bottom before the end of 2009. Why does he presume that? It could be that many of the “strong actions” favored at this moment by policymakers have the Zandi Man’s fingerprints on them. Not that that’s a bad thing. It’s just that it may color somewhat his forecast of a swing to the positive for housing markets.
Not before the national peak to trough home price average plummets by 36%, though.
Zandi and his team, as noted in an analysis by Builderonline.com senior online editor Alison Rice, look market-by-market for inflection points and timing. Here’s the link to the Builder story.
Moody’s Economy.com researchers project that Santa Cruz/Watsonville, Calif., will hit bottom in 2009’s third quarter, when its home prices will have fallen 44.3% from the area’s 2005 peak. Other markets are trending downward. Homeowners in Miami/Miami Beach/Kendall, Fla., will have to wait more than two years—to 2011’s second quarter, when home prices will have plummeted 66.4% from their 2007 highs—for their home prices to stop eroding.
The reason, as builders know too well, is the foreclosure crisis. “Normally, defaults and foreclosures have little impact on prices,” the authors say. “However, the volume of foreclosures is so large that they are an important driver of falling house prices.”
The ongoing efforts of elected and appointed officials should help. “Another cause for optimism is that policymakers, though largely unsuccessful at stemming the correction, have been spurred to respond more aggressively because the malaise has spread into a painful recession whose reach extends far beyond housing,” Zandi and his colleagues write. “Stronger policy measures are coming that will help place a floor under the housing downturn. These measures will help housing directly, by lowering mortgage interest rates and forestalling foreclosures, and indirectly, through job-generating fiscal stimulus spending that will bolster demand.”
See Housingcrisis.com’s earlier post on Dr. Zandi’s favored status as economist of Congressional choice these days.
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