Turn Around Possible in Housing Sector
- February 11, 2010
HAYWARD, Calif. (KCBS/AP) -- One of the first economists to warns of a housing bubble sees signs of life in the beleaguered real estate sector.
Professor Ed Leamer, director of the UCLA Anderson Economic Forecast, said a bounce back in the housing market is what’s needed to restore the health of the economy.
“Historically we’ve had 10 of these episodes since World War II and every one of them has had a big contribution to our recovery in housing.”
As early as 2002, Leamer had warned the steady rise in home prices during the first part of the decade was not sustainable.
Industry data support his optimism for the present.
Home prices rose in 40 percent of U.S. cities during the fourth quarter of 2009, according to data released Thursday by the National Association of Realtors. The industry group’s report credits massive federal spending with helping to stabilize the housing market.
Median home prices are down in the San Jose and San Francisco areas. In contrast, the median price for previously occupied homes sold rose in 67 out of 151 metropolitan areas in the October-December quarter versus a year ago. That's a sharp improvement from the third quarter, when prices rose in only 20 percent of cities surveyed.
The national median price was $172,900, or 4.1 percent below the fourth quarter last year. That was the smallest year-over-year price decline in more than two years.
The commercial real estate market won’t see the same vitality until people start spending at the mall again, Leamer said. Home sales and car sales are the economic bell weathers he is watching closely.
“Just as we got pummeled in those two sectors over the last few years, we’re going to have extraordinary bounce back. We’ve got to get back the loss in both homes and cars.”
Leamer spoke to reporters after a lecture Wednesday at California State University East Bay in Hayward.