It’s a new year, or at least a newer year. And with President’s Day weekend (the unofficial kick-off of the home hunting season) upon us, we, the winter weary, emerge from our slumber and begin pounding the pavement looking for a home to buy.
Most economists assert that the “Great Recession” is at its end and a recovery is imminent. But until we can look back and see the ABCs of this recession and whether it was U-, V- or W-shaped, most at this point are taking a wait-and-see approach.
Others have the insight to make strong forecasts. Dr. Pearl Kamer falls into this category.
Kamer is chief economist of the Long Island Association, the region’s largest business organization. She monitors the state of the housing market here on Long Island among many of her responsibilities, which include serving as an economic advisor to the Ways and Means Committee of the New York State Assembly.
For many years, Kamer has been at the tip of the spear in regard to Long Island’s economy. In an effort to get a sneak peak of what 2010 will be like, we asked Kamer for her input as to what the housing market holds for the region.
LI Pulse: It appears the worst effects of the sub prime lending debacle are behind us, what can we expect in 2010?
Dr. Pearl Kamer: In 2010, expect to see home prices down about 30 percent from their overall. They could fall another 5 to 10 percent, but then we should see an end to the decline. To date, prices have been buoyed somewhat by federal stimulus efforts, such as the [homebuyers] tax credit, which is scheduled to expire in June. After that, prices may slip again and foreclosures will continue, though in this instance, it will be those with good credit and prime loans that will be failing as job losses begin to have a greater impact on the housing market.
LI Pulse: Unemployment is as high as it’s been in decades. What kind of effect will this have on the housing market—and the economy as a whole—and its recovery?
Dr. Pearl Kamer: Long Island will lag behind the rest of the country in emerging from the recession due in part to unemployment. The state’s Department of Labor reported the unemployment rate for the region as of November was 6.8 percent. For comparison, that 6.8 percent marked a decline from October 2009’s 7.2 percent, but was still much higher than November 2008’s 5.3 percent. I think that rate could still rise, but it is not likely to breach 8 percent. At this moment, the worst of the layoffs for Long Island may be over.
LI Pulse: So you’re saying lenders, despite the efforts of the federal government to jumpstart lending, will remain reluctant?
Dr. Pearl Kamer: Lenders will hoard money and continue to do so. Homebuyers will need to put significant amounts down for down payment and, as a result, many will not be able to apply for, never mind qualify for, a mortgage.