Jason Schenker, an economist at Wachovia, told CNBC’s “Morning Call” that he believes 2007 will mark the bottom of the housing market, in starts and sales of new and existing homes.
But he expects housing prices to remain flat for the next two or three years -- despite solid economic and demographic growth.
“In general, the prices are likely to see support as the market revives itself,” Schenker said Tuesday. "We see Fed rate hikes next year, largely because growth is going to be strong and the unemployment rate will be low. [But] that shouldn’t hurt housing because of the fundamental support in the marketplace.”
Thomas Higgins, chief economist at Payden & Rygel, said declines in housing prices and income gains will revive the market.
“We anticipate that housing prices are going to adjust over the next few years,” Higgins said. “Typically, what happens is income gains and the combination of declining home prices over time can increase affordability, and bring home buyers back into the market."
"But," he added, "we’re not at that point yet and it’s going to take at least a couple of years.”
Higgins said he hopes the Federal Reserve will cut interest rates next year, making housing more affordable.