Housing Experts See Bottom -- Probably
Real-estate experts, in ex-Fed Chairman Alan Greenspan’s phrase, are cautiously optimistic about the coming year.
David Lereah, chief economist for the National Association of Realtors, told CNBC’s Bill Griffeth that the housing market “seems to be bottoming” – but maintained that “a couple more months of [positive] data” are needed before donning rose-colored glasses. He added that falling prices are not a key danger sign, as sales activity matters more to economic health.
David Berson, vice president and chief economist at Fannie Mae, also gave “Power Lunch” his insights and predictions. The strategist for the government-backed mortgage lender noted that if investors – rather than residents – constituted the strongest home-buyers, then the flight of those investors will indeed take its toll on the market. But Berson advised prudence to both bears and bulls, saying “any one month’s numbers must be taken with a grain of salt.”
Lereah took on the Federal Reserve, declaring that if the Fed “is going to do anything” in 2007, that action would most likely be lowering rates. Berson demurred from a direct prediction about Fed Chairman Ben Bernanke’s strategy, but mused that any Fed action won’t have a helpful effect until the second half of the coming year.
The economic mavens agreed that the housing market will probably stabilize in 2007, but Lereah avers that the leveling-off will occur at a lower level than investors had enjoyed.