SAN FRANCISCO — Money is easy, but credit is tight, economist Kenneth Rosen says — another way of saying what many would-be homebuyers have discovered during the downturn: loans may be dirt cheap, but they’re hard to come by.

Rosen, the chairman of the University of California, Berkeley, Fisher Center for Real Estate and Urban Economics, said he doubts the Federal Reserve’s efforts to keep long-term rates low can stimulate the kind of growth Fed Chairman Ben Bernanke and his colleagues are hoping for.

"Rates are low enough," Rosen told real estate investors gathered Monday in San Francisco for the Fisher Center’s 33rd Annual Real Estate and Economics Symposium.

The Fed should quit worrying about keeping long-term rates down, and look for ways to help community banks get back on their feet and resume lending, he said.

While large banks have largely written off their losses and are getting back into the lending business, "the small banking system is broken," Rosen said. There are 7,000 community banks that can’t extend credit because their capital levels are too depleted. He estimated that 700 banks are doomed to be closed down by the Federal Deposit Insurance Corp.

"The Fed is focusing on the 100,000-foot level, when the problem is at the 200-foot level," he said.

Rosen thinks the most likely economic scenario is for a continued, slow recovery, with gross domestic product growing at 2 percent to 2.5 percent a year.

He estimates there’s only a 25 percent chance that the more robust recovery the Fed is projecting will materialize, and that there’s still a 15 percent chance of a double-dip recession.

Negatives for real estate are massive job losses — many of which have migrated overseas and will never come back — policy gridlock in Washington, D.C., cutbacks in state and local government, currency wars, and moratoriums on foreclosure in the wake of the robo-signing scandal, Rosen said.

On the plus side, there’s pent-up demand, and cheap loans for those who can get them. Home prices are bottoming, Rosen said, and housing affordability is "as good as it’s been in 50 years."

Rosen expects national home prices will appreciate by 1.7 percent in 2010 — a sign that prices are stabilizing, but not much of a bounceback considering how far they have fallen.

Foreclosure moratoriums in the wake of the robo-signing scandal threaten to keep distressed properties flowing onto the market for another 18-24 months, he said.

James Saccacio, CEO of foreclosure data aggregator RealtyTrac Inc., agreed, saying foreclosures could drag into 2014. The company is already seeing a 26 percent decline in foreclosure activity in November.

Saccacio predicted that more states will impose foreclosure moratoriums in 2011, and that state attorneys general will negotiate a settlement with lenders.

The scandal came "at a very bad time of the year," Saccacio said, because the first quarter tends to be the best for real estate. If robo-signing dents spring home sales, it could put the recovery at risk.

"Jobs and consumer confidence" are critical drivers of the recovery, Saccacio said, and inventories are bloated by distressed properties.

The homeownership rate, which peaked at 69.2 percent in 2005, is now 66.9 percent and headed lower, Rosen predicted.

"Jobs are everything for real estate," Rosen said. Of the nearly 8.5 million jobs wiped out by the recession, 1.1 million have been added back since January, he said.

But many of the 2.2 million manufacturing jobs "are gone forever," to China and other countries in Asia.

Even financially strapped state and local governments are laying off, shedding 241,000 workers in 2010, a trend Rosen expects to continue in 2011.

"Our best guess is that we will not get back all the jobs we lost until 2014 or 2015," Rosen said. But by that time, the size of the labor force will also have grown, so the unemployment rate will remain high.

Rosen and his colleagues expect unemployment to decline only modestly in 2011,  to 9.3 percent. The U.S. will not see 5 percent unemployment again "for the foreseeable future," he said.

The bleak outlook for jobs and political gridlock in the nation’s capital is taking its toll on consumer sentiment, which also weighs on the economy.

The mounting deficit, and America’s trade deficit with China and other exporters of manufactured goods and commodities like oil, threatens the dollar and makes foreign investors wary of the U.S.

Deflating the dollar has sent commodities prices soaring, and raises the risk of inflation, Rosen said.

"The Fed has got completely the wrong focus," he said. "They think we can’t have inflation, but they are thinking about the domestic economy, not the global economy."

Rosen and his colleagues think inflation will average 3 percent to 5 percent over the next decade.

Interest rates "are going to go up, and go up a lot," Rosen said. "The only question is when."

In the short run, a rise in mortgage rates might boost home sales, because it might spur buyers who have been trying to time the market into action, said Alexander Villacorta, senior statistician for Clear Capital.

In the long run, rising interest rates will likely keep a lid on real estate price appreciation over the next 10 to 20 years, said Paul Chandler, CEO of Property Sciences.

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