The U.S. economy is growing and employment should soon pick up steam, but housing will continue to lag behind other sectors, economists at the UCLA Anderson Forecast said in their latest report.
"Housing continues to wallow in its modern-day depression as low interest rates are being more than canceled by the glut of new product created during the bubble years of 2004-2007, the tidal wave of foreclosures, and increased credit standards being imposed by lenders," said UCLA Anderson Forecast Senior Economist David Shulman in his forecast.
Although housing prices are down 30 percent, that would-be incentive to buyers has been offset by increased down-payment requirements, Shulman said.
Fears of "a further ratcheting down in prices, along with the shock of witnessing an unprecedented collapse in price structure, has kept buyers out of the market. Put simply, the investment value of homeownership has declined. Furthermore, the usual factors associated with housing weakness … tepid job growth and high unemployment, are suppressing demand."