Mark Zandi, chief economist of Economy.com, says home prices will hit bottom next year.
Many other economists think housing is bottoming now.
“I think we’re clearly moving in the right direction,” he tells Bloomberg TV. “I think a year from now we’ll find a bottom in all regards with respect to the housing market, including housing values.”
Why does the former adviser to John McCain feel this way? “There are some hopeful signs,” he says.
“Home sales … have stabilized, in part because of the foreclosures and short sales. But that’s part of finding a bottom in the housing market.”
Zandi says excess home inventories will soon be depleted.
“Housing construction starts are running at 500,000 roughly per annum,” he explains. “That’s the amount of supply. Underlying demand, even in this really bad economy, is running around 1.2 million per annum.”
The result: “We’re going to work off 700,000 in excess inventory per annum, and we’ve got about 1 million in excess inventory out there,” Zandi says.
“So 1½ years from now, I think we’ll work through most of the inventory.”
Another positive sign: the mess is regionally concentrated — in Miami, Phoenix and Las Vegas for example, Zandi says.
“In other parts of the country, we’re going to blow through the excess inventory pretty quickly.”
Housing guru Robert Shiller’s views is a bit more upbeat than Zandi’s.
“Prices are still falling, although at a somewhat lower rate,” he tells Time magazine. “There is also some sign of pick-up in pending-home sales.”
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