Economist Mark Zandi says the United States is “nowhere near” a housing market recovery, but he can nonetheless see a light at the end of the tunnel.
Zandi, the chief economist of Moody’s Analytics, sees home prices rising at the earliest at the end of 2012, when buyers snapping up cut-rate foreclosures and short sales will have cleared the market to the point that the percentage of distressed sales starts to fall.
“We’re still in the housing crash,” he said.
Presently, about a third of home sales are of distressed property. That percentage will increase in the near-term as the foreclosure pipeline, temporarily slowed by flawed processing and related lawsuits, starts to flow again.
Additional price declines will be painful, but necessary for the market to bottom and finally rebound.
“I’m expecting the process to reaccelerate as we work through the foreclosure issues, and we work through some of these legal actions,” he said.
Meanwhile, the housing market is already starting to show early signs of healing and the economy is slowly getting stronger.
In some markets, home prices are holding firm. The percentage of homeowners who are 30 days late on their mortgages is falling, Zandi pointed out. And the spread between the discount on foreclosed and other properties is narrowing.
What’s more, he sees stable, significant job growth. The economy has created about 2 million private sector jobs since early 2010.
Businesses are strong enough to do more and will, when they have more confidence in the future.
The question of confidence, however, is a sticky one, Zandi acknowledges, and represents valid challenges to his relatively optimistic view of the housing market over the next few years.