Daily Real Estate News  |  November 8, 2008  |   Yun: Housing Can Save the Economy
The depth of the current recession depends on the housing market’s recovery.

"And housing’s recovery will depend on stabilizing prices and inventory absorptions,” NAR Chief Economist Lawrence Yun told a packed theater here Friday.

If housing prices stabilize, the current recession could be mild and recovery could come in the second half of 2009. Without stabilization, the recession could drag on until 2010, he said.”Economic conditions are worst than in the last two recessions, so the current downturn could be deep and prolonged, said Yun.

The good news, said Yun, is that even if the recession is prolonged ” housing doesn’t necessarily follow the economy.”

Housing demand is driven more by affordability and mortgage rates than economic performance, he said. “Even with the 6 percent current unemployment or the 9 or 10 percent that could come with a severe recession, most people will have jobs and will buy homes if the pricing incentives are there,” said Yun.

More positive news is that home sales—although not prices—showed their first uptick in three years during the last quarter. “We are beginning to come back, but recovery won’t happen until inventories are reduced from their current 10-month levels back to a more normal six months.

Fannie and Freddie also need to continue to fulfill their public mission of lending in difficult markets to keep mortgage rates low, Yun said.

But even more critical to a housing recovery are stabilizing home prices. Only then will new buyers get back into the marketplace and underwater buyers be able to consider moving up, he added.

A federal housing stimulus package for home buyers and the promised federal actions of buying troubled loans are also need to support home markets, he said. He urged members to make their congressional representatives aware of the need to help housing.

—Mariwyn Evans