Industry News

Real estate forecast calls for soft landing — with turbulence

Anderson Forecast predicts prolonged correction in home prices

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The housing market will not crash unless the job market weakens significantly, though home prices are expected to stagnate for at least five years during this down cycle, according to the latest Anderson Forecast. Produced by a University of California, Los Angeles, center, the forecast calls for the market prices of homes to hold steady over the next five years, which equates to a drop of about 15 percent to 20 percent in real terms because of projected inflation. Also, the forecast calls for a lowering of the Federal Funds Rate from its current level of 5.25 percent to 4.5 percent by mid-2007. Washington, D.C., could face price depreciation of about 7.5 percent in real terms through 2010, according to projections in the forecast report, while prices in real terms could drop 7.1 percent in California, 6 percent in Hawaii, 5.9 percent in Rhode Island, 5.8 percent in Maryland and Nevada, and 5.2 percent in New Jersey during that period. These price corrections could take a very long ti...