Frank Nothaft, the chief economist of housing finance giant Freddie Mac, said in a speech Thursday that it could be the turn of the next decade before home prices recover.
"I don't think we're going to see any improvement in the national house-price matrix until 2010," Nothaft said, according to McClatchy Newspapers.
Some of Nothaft's other predictions for the market?
- Home building this year is likely to have its worst performance in five decades.
- Mortgage originations, for new home loans and refinancing, will drop 16 percent in 2008.
- Foreclosures, which rose by about 1.5 million in 2007, will keep increasing this year.
The good news?
If there was any good news in the stark snapshot of the housing crisis, it came from a bit of really bad news. The Freddie Mac economist thinks that new single-family home starts this year will be the lowest in 50 years, back when Dwight D. Eisenhower was president.
What's good about that? The plunge in new-home construction means that fewer homes will come onto the market in an environment with few buyers. A fall in home starts helps reduce the supply of unsold new and existing homes. By late this year or early next year, life should be returning to the national housing market, but prices won't see significant recovery until 2010, Nothaft said.
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