Yesterday I saw a lot of language like "glimmer of hope" and "severity could be waning" in a national story by the AP on the housing market.
The AP quoted Mark Zandi, chief economist of Moody's Economy.com, saying, "The bottom of the housing downturn is coming into view."
I had to wonder if Zandi meant that's the case nationally. What about California, and this part of the state specifically?
I e-mailed him that question. He wrote back with this:
"We are at the beginning of the end of the Sacramento housing crash.
There are more house price declines to come, but the worst of the
freefall in prices is at hand. Another 5% to 10% decline in house prices
will restore housing affordability and coax first-time homebuyers back
into the market. There remain some serious threats to the outlook,
including the ongoing credit crunch and weak job market, but with a bit
of luck, including stable oil prices, and good policymaking, the
Sacramento housing market will find its footing by this time next year
and prices will resume rising again early in the next decade.
"P.S. I'm less optimistic about the rest of the Central Valley,
particularly around Stockton, Merced and Modesto. Prices will like fall
another 10% to 15% through the end of next year, and won't rise in
earnest until 2011-12."
Zandi is author of "Financial Shock." It's a good book and one of the first big chronicles of the U.S housing and credit collapse.