Home -> Law Blog Directory -> Bailout Blogs -> Calculated Risk

Bailout

: Calculated Risk

UCLA Forecast: Weakest Recovery of Post War Era

By Anonymous

Here is a fairly positive outlook. I think they are overly optimistic on house prices (forecasting an increase of 0.9% nationwide in 2010). Note: the Anderson forecast has a pretty good track record, but they missed the current recession (a major miss!)

From Reuters: U.S. poised for weak recovery : UCLA forecast

"The free-fall stage of the recession appears to be over and in fact we anticipate that the economy will record positive, albeit minimal, growth as early as the third quarter," ... We are forecasting the weakest economic recovery of the post-war era with real growth on the order of 2 percent to 3 percent," the report said.

"Simply put, we believe that the economy will be weighed down by newly chastened consumers attempting to increase their saving rate and a wrenching structural adjustment in the financial services, automotive and retail industries,"

More from Jeff Collins at the O.C. Register:

The lion?s share of the housing decline is behind us, the UCLA Anderson Forecast reports today.

U.S. home prices have fallen 31% from the peak and are still falling. But home prices should start rising again by late 2009 or early 2010, the forecast said.

In addition:

?New home prices will increase 0.9% nationwide in 2010 and 2.9% in 2011, according to the forecast. The 2011 price still is forecast to be 13% below the peak, however.

[CR: This seems too optimistic. I think prices will fall through 2010 nationally, and for a longer period in some higher priced bubble areas]

?The forecast warns: ?Because house price bear markets tend to have ?long tails,? do not expect any swift rise in prices over the next several years. Indeed, there are still more ?shoes to drop? as a new round of Alt-A mortgage resets hits the market in 2010-11 and foreclosures rise on prime mortgages weighed down by high unemployment.?

?The supply of homes listed for sale has gone down faster in Orange County than in the nation as a whole, said Jerry Nickelsburg, co-author of the Anderson Forecast.

??People are on the sidelines, and they?ll come back into the market when they see the benefit of waiting is no longer there,? Nickelsburg said.

?In Orange County, that?ll start to happen later this year, he said.

?New home construction bottomed out in California in the first quarter of this year, and in the second quarter nationwide, the forecast said.

[CR: This could be correct. I've been expecting new home construction to bottom sometime this year.]

?Developers now are under-building, and the market is primed for growth since homebuilding is failing to keep up with population growth.

?Nickelsburg said that while there is pent-up demand for new homes, potential buyers are on the sidelines ? living with their parents, for example ? and have yet to jump back into the market.

Full post as published by Calculated Risk on June 17, 2009 (boomark / email).