How far will the housing market rebound?
Date posted: May 7, 2013
Things are looking up in the housing market in sales, construction and prices. But some worry that it won’t last, while others fret the growth will become too robust and lead to another crash. N.C. State University economist Mike Walden responds.
“Well, I would say right now that the housing market is not too hot, not too cold, but I think it’s just about right.
“Now, some people are already worrying about whether we’re going to go back to those heady days in the mid-2000s where anyone could get a mortgage, people were leveraging themselves up to the hilt, and, of course, that led to overbuilding, overbuying and eventually the housing bust. I don’t see that right now, and most economists don’t see that in the housing market and the mortgage market.
“I think we’ve learned our lesson. We have more controls both in terms of the controls that financial institutions are imposing on borrowers as well as controls that the government is imposing. So, I don’t think that’s a valid concern right now for worry.
“Now another aspect of the housing market some worry about is our aging population. As people move out of middle age into older age, the concern is that a lot of those middle age folks will sell their homes, and they’re going to move in, perhaps, to rental situations. Could that actually cause a housing bust?
“Well, here I will report a demographic forecast. And demographic forecasts tend to be very, very good, which suggests that household formation and the need to replace aging dwellings is going to continue to lead to a healthy new housing market, healthy new construction.
“So, I think in the near term we’re going to see an improvement in the housing market. I think we’re going to get back to something much more close to normal, again, not too hot and not too cold.”
Category: Economic Perspective