by Calculated Risk on 7/01/2005 01:19:00 AM
Friday, July 01, 2005
The Orange County Register reports on a presentation by Wells Fargo's chief economist Scott Anderson at the Westin South Coast Plaza on Wednesday. The Register quotes Anderson:
"We're talking about a decade at least – if not more – of (housing price) stagnation,"
"There will be a slow fizzle (in prices), not a pop,"Still Anderson is fairly positive:
There's a little oomph left in the market, he said. Anderson predicts that 30-year, fixed mortgage rates will remain around 5.8 percent over the next six months, which could help boost home prices about 5 percent this year. Next year, homeowners might see a 1 percent to 2 percent increase in appreciation, then Anderson expects prices will level off indefinitely until incomes can catch up.Previous housing booms also fizzled. But ten years of nominal price stagnation would be a 30% decline in real terms.
Even though much of Orange County's economic recovery can be attributed to the housing boom, Anderson doesn't think stagnant housing prices spell recession, because strength will remain in other sectors like technology and tourism.
I'm less confident than Mr. Anderson about avoiding a recession.
Posted by Calculated Risk on 7/01/2005 01:19:00 AM