2 analysts: Housing at or near bottom

If the best that can be said about today's housing market is that things appear to have gotten "less bad" in the first quarter, then there's still some cause for optimism.

At least, that was the message two economists, Mark Zandi of Moody's Economy.com in West Chester and David Crowe of the National Association of Home Builders, conveyed yesterday during a gathering of more than 200 national builders for a three-day symposium on the over-55 housing market at the Marriott in Center City.

Discussion of "active-adult" housing - which Zandi and Crowe agreed was still a small part of the total market - was something of an afterthought as the economists navigated carefully through their analyses of these "dark times."

"I think we are at a bottom," Zandi said, acknowledging he hadn't predicted the severity of the current downturn because "I didn't think the depth of the decline I saw in the model for the boom years could be justified."

That said, it will still take three or four years to return to what Zandi called "historic levels" of home building, 1.7 million single- and multi-family units per year. The current 500,000 units "will be about as low as we go," he said.

Though it was limited to four or five states at the outset, Crowe said, the housing downturn now affects every market to some degree.

Home prices have fallen just about everywhere to 2003 levels, and Zandi predicts they have about 10 percent more to go. Combined with interest rates that Zandi forecasts will drop to 4.5 percent by summer, housing will be affordable in many markets for the first time in years.

In the Philadelphia region, the ratio of home prices to income has reached the "affordable level," Zandi said, but the ratio of prices to rent has not dropped, and "until it stabilizes, buying will not increase."

There's been an uptick in buyer traffic recently, some active-adult builders in the area said.

"From last September to mid-March, things were ridiculously slow," said Frank McKee, president of McKee Builders in Springfield, Delaware County, "but, except for Easter, we've been averaging three deposits a week. It's as if someone turned on a light switch."

His best year was 240 units sold in 2006, McKee said, and it's unlikely that three a week will get him there in 2009.

Crowe said the nation's economic recovery will be slowed because of a surplus of homes for sale, which means fewer construction-industry jobs.

"Because housing usually leads recovery, this means we won't see any growth in employment until 2010," Crowe said, though he and Zandi agreed that when President Obama's stimulus package kicks in later this year, job loss will likely slow down.

"Infrastructure spending is the key to slowing job declines," Zandi said. If "we don't see any slowing of job losses by early summer, this optimism will be misplaced."