Mark Zandi, chief economist and co-founder of Moody’s Economy.com, sees job creation in the near future, which he thinks is the key to an economic and housing recovery. Zandi believes mortgage interest rates will remain historically low, the availability of jumbo loans will improve and home sales will rise over the next few years.
The following are excerpts from Realtor.org’s interview with Mark Zandi and Lawrence Yun:
Zandi also forecasts improving demand for housing, but with foreclosures rising later in 2010 before easing in 2011. He said home prices may weaken this year. “The housing crash is over—nearly. We are now near the bottom,” he said. “There will be no real price growth in 2010 or 2011. Whether home prices weaken is unclear, but it will take two more years to work off excess housing inventory at the current sales pace. Of course, if demand picks up, it would take less time for prices to rise,” he said.
Zandi said that the Fed won’t raise interest rates until the unemployment rate is heading south, but that deficit spending is the greatest threat to the U.S. economy. “The debt-to-GDP (gross domestic product) ratio is extremely high and troubling, meaning we could have measurably higher interest rates in 2011 and 2012.”