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The Big Question
What lies ahead for the housing market?
As part of this new feature in CalBusiness, we asked Haas real estate expert Ken Rosen the question above.
ROSEN: House prices have started going up—0.2 percent last year, according to the National Association of Realtors. Unless we go into another recession or all the foreclosures hit the market at once, I think we've bottomed out and prices will rise 2.6 percent this year. Affordability is the best in 50 years, thanks to low interest rates and price declines.
But the U.S. housing market will have a very slow recovery. There is a big inventory of unsold homes. People haven't realized they need to lower their prices more. There are still lots of foreclosures. And 40 percent of people trying to buy a home are getting rejected for a loan.
Another risk is artificially low mortgage rates. If I'm right about the 10-year Treasury moving from 3.3 percent to 5.5 percent by the end of 2012, mortgage rates will reach at least 6.7 percent. That is a real concern and could stall the recovery.
Watch Ken Rosen give his real estate outlook at insights.haasalumni.org/rosen/.
To submit a Big Question to CalBusiness, email firstname.lastname@example.org.