Recovery in the housing market, and the economy at large, is dependent on what the government does — and doesn't do — to influence the recuperation, according to a panel of economic observers at a real estate conference in New York.
"It's hard to be wildly optimistic, but there are some encouraging signs. From where we've been everything looks up," said Joel Singer, CEO of the California Association of Realtors. "We'd be kidding ourselves to think the market will turn and look like it did four or five years ago, but there is long-term opportunity."
Singer noted the one large concern is the growing number of states running large deficits. One way or the other, there's going to be another deleveraging, particularly in state-funded pension funds and "state debt and national debt both won't be eased easily," he said.
Federal Reserve efforts to flood the market with liquidity may help banks reduce the losses they'll ultimately take on toxic mortgage assets because of the Fed's recapitalization efforts.
"At some point, you're going to see an unintended consequence of this effort of stopping the deflationary credit crisis," said Noah Rosenblatt, founder of real estate blog UrbanDigs.com.
"We're down a track where government has to get smaller in order to survive," added Ted Jones, senior vice president and chief economist of Stewart Title Guaranty Company.
The return of lower unemployment will be a major factor in economic recovery, but government budget woes could slow down recovery.
"Many states and local governments are going to have to cut employees and that’s a drag on the employment market and consumer confidence," said Carter Murdoch, senior vice president and national affinity business development executive at Bank of America.
Murdoch also said 2011 will be marked by high volume of distressed properties hitting the market, depressing prices, which will slow down the housing market's ability to help fuel broad economic recovery.
"The number of distressed properties coming to market in the next three quarters is going to be very significant, and that will impact home prices," Murdoch said. "The reality is we need to get through that inventory."
