From Inman News:
Real estate forecast calls for soft landing — with turbulence
By Glenn Roberts Jr.
The housing market will not crash unless the job market weakens significantly, though home prices are expected to stagnate for at least five years during this down cycle, according to the latest Anderson Forecast.
Produced by a University of California, Los Angeles, center, the forecast calls for the market prices of homes to hold steady, which equates to a drop of about 15 percent to 20 percent in real terms because of continuing inflation. Also, the forecast calls for a lowering of the Federal Funds Rate from its current level of 5.25 percent to 4.5 percent by mid-2007.
Washington, D.C., could face price depreciation of about 7.5 percent in real terms through 2010, according to projections in the forecast report, while prices in real terms could drop 7.1 percent in California, 6 percent in Hawaii, 5.9 percent in Rhode Island, 5.8 percent in Maryland and Nevada, and 5.2 percent in New Jersey during that period.
These price corrections could take a very long time in some states, according to one of the forecast reports, titled “2005: The Year the Tortoise Won the Race, Whither California Home Prices?” and prepared by Edward Leamer, forecast director. It could take 6.3 years to 16.5 years to work off excess home-price appreciation in California, the report suggests.
“In other words, these problems are likely to be with us for a long time,” Leamer states in the report.