From the U-T, note the last paragraph:
CAMBRIDGE, Mass. – The nation’s housing market may begin to recover this year, ahead of the general economy, but only if a lot of “ifs” go the right way, according to a co-author of one of the most-watched housing indexes.
Karl “Chip” Case, who helped create the Standard & Poor’s/Case-Shiller Housing Market Index, struck a guardedly upbeat tone yesterday at a conference at the Lincoln Institute of Land Policy.
“I’m optimistic,” said Case, an economics professor at Wellesley College in Massachusetts. “I think we’ll see housing turn around before other people do. I think we’ll see it turn up this year or next” before the rest of the economy improves.
The conference focused on the future of cities after the recession, and the advent of the Obama administration in Washington.
Case said various indicators point to stabilizing prices, particularly at the starter-home end. If that happens, he said, the rest of the economy is likely to respond similarly.
But Case couched his sunny outlook against a cloudy set of preconditions that must be met for the housing slump to end: rising housing starts, removal of the “toxic assets” weighing down lenders and investors, and renewed trust in banks’ balance sheets.
If housing does not recover, he warned, a general economic upswing “could take a very long time happening.”
Case also said the national housing picture is somewhat distorted by conditions in what he dubbed “Flocazn” – Florida, California, Arizona and Nevada – where more than 50 percent of all resales involve auctions of foreclosure properties, versus about 12 percent in the other 46 states.
He took particular delight in needling Californians for their undying belief in ever-rising home prices. But this faith is understandable, he said, because downturns in the 1980s and ’90s were followed by robust price recoveries and the 2000-01 recession did not result in any price declines.
“People in California know it’ll come back,” Case said.
This California article of faith is shared by many outside the Golden State. He cited an economist friend who complained that he had not sold his house even after two years on the market. Case gently reminded him that if he lowered the price, it might sell.