Is the housing market across the United States in a recovery mode or will we continue to see prices go down further?
While some economists are being optimistic and bullish about the housing market recovery, Dean Baker, an American economist and co-director of the Center for Economic and Policy Research is predicting the opposite. He states that “it’s really hard to make a case for that” when asked about the housing recovery. And he says that he fully expects that there will be a fall-off in purchases for the remainder of 2010 and even continuing into 2011.
Part of his reasoning is that the tax credit for first-time buyers has now expired, he is predicting that mortgage rates will rise to 5.5% to 6% by the end of the year due to the Federal Reserve exiting the mortgage market, and probably the most telling thing is that there is still a glut of excess inventory, including foreclosures, short sales and bank owned properties, and rental rates are falling in may markets.
Read the whole story at “Housing Optimists Are “Not Paying Attention”.
Oh and BTW, Dean Baker was one of the first to predict the current real estate bubble in a published work from 2002, titled “The Run-up in Home Prices: Is it Real or Is It Another Bubble?”
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