Home prices in for another tumble in 2010?
OK, I don’t know if I am completely buying into the new conventional thinking about the housing market.
At times it seems as fashionable to be gloomy now about the future of the housing market as it was to be bullish back during the bubble years.
That said, there are reasons to be cautious right now – certainly it’s much too soon to declare victory after a few months of tax-credit fueled jumps in home sales.
So that brings me to Moody’sEconomy.com’s Mark Zandi, who has gone positively gloomy on the prospects for the housing market in 2010.
In fact, Moody’s star economist is predicting another big fall in home prices next year, by 5 to 10 percent. Harder hit markets, like Miami, Las Vegas and Phoenix could see huge drops of as much as 20 to 30 percent.
Even the Boston area, where the decline in housing prices has been long but relatively shallow, Zandi and Moody’sEconomy.com forecasts another significant drop.
Home prices in the Boston metro market will fall another 4.5 percent in 2010, followed by a 3.4 percent rebound in 2011. (The median home price is pegged at $315,020.)
Of course, it does not take a rocket scientist to list all the factors, as Zandi does, that will be a drag on home prices.
It’s the usual list of suspects: high unemployment, a planned pullback by the Fed come March on its aggressive buying of mortgage-backed securities, not to mention the phasing out of the home buyer tax credit a month later in April.
And of course there’s the never ending foreclosure crisis to round out the list, with another 2.4 million homes likely to be seized by their lenders.
In fact, Pittsburgh is the only market in the country that will see home prices rise next year, by a modest .41 percent, Moody’sEconomy.com predicts.
It still sounds a bit fashionably gloomy to me. A case can be made that some perpetually high priced markets, including Boston and suburbs, might start to see some modest price increases.
Sure we have our share of foreclosures, but we also didn’t get the massive overbuilding that has buried an array of once booming Sun Belt cities with empty condos and abandoned subdivisions.
A lot depends on how quickly the economy comes back, both nationally and locally. And here again, the Boston area, in contrast to past downturns, appears poised for a quicker rebound.
