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Better Times Ahead Predicted, But Patience is Still Required

Better Times Ahead Predicted, But Patience is Still Required

by Carla Palmer 11. May 2011 17:08

Rehab property investments are always available, even when times are good, but with a housing rebound almost certain, the time might be ideal to buy a fixer-upper and sell for a profit when conditions improve.

Mark Zandi, chief economist at Moody’s Analytics, at the annual spring construction forecast conference of the National Association of Home Builders (NAHB), said “I’m optimistic and I’m confident that everything seems to be falling into place for a better economy and a better housing market.” He cautioned, however, that a real recovery won’t occur until this time next year, confirming NAHB’s own predictions.

Chief economist for NAHB, David Crowe, said “momentum will begin to build as we get into 2012” and is forecasting a 51% increase in single-family housing starts next year, compared to 2011. Apartment builders will see results sooner, with 140,000 units projected for 2011, up 23% from last year.

Zandi asserted that the market is ready to “pop”, but warned that the foreclosure crisis isn’t over, with most 90-day delinquent mortgages likely to end up as distressed sales, and account for 33-35% of all sales in 2011.

He also shared his assessment that most houses are now priced correctly, and Crowe noted that when distress sales are factored out, prices are holding steady.

“The really good news,” according to Zandi, is that demand will increase faster than supply because the building infrastructure has been “significantly impaired” by the inability of builders to get funding.

“Most states are underproducing,” to meet the estimated 2 million unformed households, called “shadow buyers” by Crowe, who are ready to move out of Mom’s basement. “The underlying demographics call for more production.

”Zandi backed that up, saying that there’s “a lot of juice” in store for the coming years, as home builders work to make up for the deficit between a strong demand and a lack of supply.

- Carla Palmer

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