Smart money is leaving the real estate market
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Are investors are pulling out of the housing market because of continued stagnation? The UCLA Anderson Forecast for the second quarter of this year predicts a sluggish U.S. economy due to cooling of the housing market. Forecast Director Edward Leamer said, although the economy will remain sluggish throughout the year, he sees little likelihood of a recession. Nonetheless, Leamer and his colleague, Michael Bazdarich, believe conditions for a recession are in place. Leamer told MBA4success.com: “Our feeling is that there are certain precipitating events that must occur before a recession can be forecast, and these events have not occurred yet. The conditions are in place for a recession (such as the cooling of the housing market and the related wealth effect), but we are not seeing evidence that it will happen within our current forecast period.” |
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According to HUD, housing market performance in the first quarter of this year was mixed. Production levels set new records, but housing sales declined. Single family starts and completions set new records, while sales of new and existing homes declined but still were at high levels. There was growing concern that the inventory of new homes for sale was at record-high levels, and the number of existing homes on inventory was up 40 percent in the last year. Homeownership dropped to 68.5 percent in the first quarter of 2006.
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