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IS HOUSING MARKET BOTTOM IN SIGHT - YES, Say Some Economists!

NATIONAL ASSOCIATION OF HOMEBUILDERS CONFERENCE LAST WEEK OFFERS GLIMMER OF HOPE!

Here in Chicago, homes-for-sale inventory levels are high - with over 15 months of inventory in many Chicago Neighborhoods and Suburbs.  Despite heavy price discounting and sizable incentives for purchase, new home builders around the Chicago Metro Area are still having trouble selling new and spec homes in their developments.

But if you were to assess the general mood at the National Association of Homebuilders Conference, there might be a little light at the end of the tunnel.

"I'm hopeful threat the markets will come to their senses soon," said Michael Moran of Daiwa Securities America at the Conference last week.  Moran and other economists point to the Fed's Bailout Plan, including the government purchase of bad mortgage debt, will help housing recovery.

Said David Seiders, Chief Economist for the NAHB, pent-up demand, along with declining prices, promotional incentives, dropping numbers of housing starts, and predicted rate moderation for mortgage loans, should help create market rebound sometime in 2009.

Most economists suggest caution, however.  Many factors will combine to drag an anticipated recovery.

Indeed, the U.S. Unemployment Rate is up nearly 39% versus 2007, currently standing at 6.1%.  It may reach as high as 8% next year, some experts predict.  Nationally, median home prices have fallen 20% from their peak in 2005, but will probably decline another 10% or so before stabilizing, others say.

Across the country, roughly 12 Million homeowners are currently under water on their mortgages - they owe more on their home than its current market value.  Thousands more foreclosures are likely well into next year.

And, importantly, supplies of homes for sale is bloated in most U.S. Metro Markets, including Chicago.  Supply is expected to out pace demand for at least another year, perhaps longer, many feel.

Still, the pain of thousands of homeowners in financial distress, close to default, is far from over.  When the market does rebound, homes will be worth considerably less than they were at the peak of the recent boom - but they will be more affordable.  Loans will be available - but only to those with qualifying credit and moderate equity available.

But, eventually, the down cycle will be over, and some semblance of sanity will return to the U.S. Housing Market.  Hopefully . . . soon!

For more, please read June Fletcher's article in yesterday's Wall Street Journal.

DEAN & DEAN'S TEAM CHICAGO

Posted: Thursday, October 30, 2008 3:17 PM by Dean's Team

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