"We expect the housing markets to start stabilizing in late 2009-early 2010, but any price appreciation will have to wait for the economic recovery to take hold," says the school's latest economic forecast, which was released today.The forecast noted that local homes sales have picked up mostly because of forced-selling from foreclosures.
"After hitting a high of over 4,100 foreclosures in the third quarter 2008, the numbers eased to approximately 2,200 in the fourth quarter last year, which was close to the high reached in the early nineties recession," says the forecast. "Despite historically low mortgage rates, the imbalance between supply and demand for housing persists. Tougher credit standards, uncertainty about job and income prospects and expectation of further house price declines continue to depress housing markets in the region and nation."
Ivo Tjan, chief executive of CommerceWest Bank, which co-sponsored the CSUF forecast, was even more negative than Fullerton economists.
He thinks Orange County's housing market is being particularly hurt because of the difficulty in getting jumbo loans. The super conforming jumbo mortgage limit in Orange County is currently nearly $730,000 but many lenders are only approving loans up to the previous $625,500 maximum.
"I know there are some places in the country where people would ask, ‘Why would you need a $750,000 mortgage?' but there are a lot of jumbo loans in Orange County," Tjan says. He predicts it will be five to seven years before Orange County will see price appreciation return to a more normal 3% to 5%.
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