By Karen Rivedal, The Wisconsin State Journal
Jun. 12--The nation could see a much needed housing recovery sometime in 2010, but unemployment and foreclosure rates will likely worsen between now and then as the economy struggles to get on track, according to experts at a housing conference Thursday at University of Wisconsin-Madison.
"Just try to hang on for another year," keynote speaker Richard Green told an audience of about 100 bankers, developers, real estate agents and other housing professionals gathered at the Fluno Center.
Positive signs of a coming recovery include a return to housing affordability, continuing low mortgage rates and plenty of pent-up demand from groups including people in their 20s and 30s who have held off on buying a house the last few years due to economic uncertainty.
"Finding the bottom is really key to getting out of this mess and I do think we're close," Green added. "The long-term outlook for housing is very positive."
The annual event -- this year dubbed "Housing Outlook 2010: Continued Crisis or Recovery?" -- featured four sessions throughout the day in addition to Green's address. Topics included a survey of what it will take to spark a recovery, evolving financial markets, the outlook for real estate development and how neighborhoods are responding to foreclosure pressures.
Green, a real estate professor at the University of Southern California at Los Angeles and a former director of financial strategy for Freddie Mac, had a simple answer for what it would take to convince him that the housing market was on the mend.
"When housing starts go up, then I'll start feeling a lot better," he said. "Until housing picks up, I can't see what the driver (to economic recovery) would be."
Housing starts have fallen about 80 percent from the housing peak in 2005 to now, which makes for "the all-time worst trough since World War II," Green noted. But it's still a bit too soon to begin building anew, he said, as many areas struggle to burn through excess inventory created by the speculative overbuilding seen from 2000 to 2007 and the subsequent foreclosures.
Once that inventory is depleted, the housing market can begin to stabilize and the national economy can grow again.
"Nothing leads the economy like the housing market," Green said. "When housing collapses, the economy collapses. When it picks up, the economy picks up."
Before that happens, though, experts predicted more foreclosures nationwide as job losses and other crises cause even people with good mortgages -- not the subprime loans that caused so much of the market havoc -- to miss payments and default more often on homes that have dropped in value due to the housing collapse.
"It's the people who have a $200,000 mortgage on a house that's now worth $150,000," UW-Madison professor Stephen Malpezzi said. "What keeps me up a little bit at night is that problem."
ABOUT THE CONFERENCE
The housing conference was jointly sponsored by the Graaskamp Center for Real Estate at UW-Madison's School of Business, the Wisconsin Realtors Association, the state Department of Commerce and the Wisconsin Housing and Economic Development Authority. Presentations from the sessions are expected to be available at the event's Web site: www.bus.wisc.edu/wcre/housingconference09.
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