Looking back at the past few years in the housing market isn’t pleasant, but it is easy to see what went wrong. Looking forward isn’t easy, but it sure looks a lot better.
Speakers at the University of Denver Rocky Mountain Land Use Institute’s annual conference March 5 took a hard look at the ongoing crisis and what will have to go right to get the country out of a broken housing market.
And they were upbeat. The prospects for recovery starting within a year are good, they said.
Arthur “Chris” Nelson, a professor of planning at the University of Utah, and David Crowe, chief economist for the National Association of Home Builders, both told a crowd of more than 200 scholars, builders, students and planners to look for a rebound in home prices and demand sometime in 2010, possibly as early as late 2009.
Introducing the speakers, real estate attorney and planner Thomas Ragonetti said builders have a history of overbuilding in hot markets, from retail space in the 1960s, to office space in the 1970s to condominiums in the 1980s. But it wasn’t until the late 1990s and early 2000s that builders got into building single-family homes on such a massive, speculative scale, he said.
“They built it, and people didn’t come,” he said. “We’re finally going to have to confront the problem that we can build too much, too fast.”
Crowe said builders have gotten the message, slashing new construction in 2008 and 2009. By next year, Nelson and Crowe predicted demand will have taken up the surplus housing and prices will rebound.
But Nelson predicted the rebound, and demand for housing, will be different in varying sectors of the market both in the near future and going forward. Changing demographics will see stronger growth in and near urban centers and in far rural areas. The big loser, he said, will be in between, in the further out suburbs, which aren’t rural and aren’t convenient to urban public transportation.
Crowe said builders will have to accurately predict consumer demand while waiting for the existing inventory of vacant homes to clear. Foreclosures continue to add more homes to the list, and in the near term, prices will continue to fall.
“The good news is this will be the turnaround year,” he said.
First-time homebuyers — bolstered by declining prices, low interest rates, and the new $8,000 federal housing contributions under the stimulus package — will be the key to getting the market moving again, he said.
Nelson concurred, even predicting new types of growth at the site of abandoned retail properties close to urban centers.
“The future is bright,” he said. “We just have to work through the malaise.”
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