Economist: Housing Will Hit Bottom Next Year or 2010

The housing market will hit bottom between mid-2009 and mid-2010, economist Christopher Thornberg said at the REOMAC Fall Conference in Hollywood Beach, Calif.. At the show's opening session, he predicted the industry will see negative growth in the third and fourth quarters and through most of 2009. Positive growth will begin in the fourth quarter of 2009 and first couple of quarters of 2010, he said. "In the second half of 2010 things will finally start to get back up and running," said Mr. Thornberg. "The scarring of this downturn will have worn off. Your typical homebuyer has a two year memory. People are going to be so scared, they're not going to touch it for two years. By mid-2012 they will start buying again." Housing markets, when they hit bottom, they don't bounce, he added. "It's not like the stock market. Housing markets splat. They hit bottom and stay there." He encouraged REOMAC members, which include asset managers and REO agents, to keep some perspective, because mortgage rates are still lower than they were in 2000. States like California have to see prices come down 40-45% to get back in line with historic norms relative to incomes, he said. "Every state is different. We're getting there."