Recovery in '09? Some Analysts Not So Sure

Economists are watching the housing market closely to determine whether this year’s spring buying season will be an improvement over last year’s.

Mortgage rates and home prices are lower and home builders are offering more incentives.

But some observers are still pessimistic.

"I don't have a lot of hope for the spring selling season absent a massive program from the government," said Robert Stevenson at international bankers Fox-Pitt Kelton.

"We also have escalating job losses. Every day you see headlines about a different company cutting 10 percent of its work force," Stevenson said. "This is bound to have an impact eventually as people losing their jobs fall further underwater on their mortgages and credit-card bills."

"We expect a further 10 percent decline in home prices in 2009, " Credit Suisse analyst Dan Oppenheim wrote in a Jan. 26 report to clients. “Similar to retailers, we expect home builders to lower prices in order to generate sales. However, the lenders remain the most motivated of sellers so builders will likely struggle to sell homes in foreclosure-rich markets."

Source: The Wall Street Journal, John Spence