More on June home sales
"Prices have more to fall, given the high level of foreclosure, but sales and construction, I think, are at bottom," Zandi said. "And part of it is related to much-improved affordability."No space in the story for this, but I also asked him about his expectations for price drops. Moody's Economy.com is forecasting "peak-to-trough" declines in the Baltimore metro area of 25 percent, as measured by the median price for resale homes. Nationally, the forecast is for a 37 percent decrease.
Zandi's not expecting much in the way of sales gains, though. Just the promise of some stability after years of retrenching.
"As long as the job market is sinking, it's hard to imagine home sales taking off to any considerable degree," he said.
A smaller drop for our area, then, but Zandi expects it will be over sooner for the U.S.: the third quarter of next year, compared with a first-quarter 2011 bottom in prices for the Baltimore metro area.
Here's what he had to say about our market and its price outlook:
"It's certainly been hit hard, but it's held up much better than I thought it would through this period. It may be that I've been overly pessimistic. The region's economy has actually held up reasonably well given the severity of the national downtown. That may go to the preponderance of health-care activities in the region, which is the one industry nationwide which has continued to do reasonably well.
"It may also suggest, though, that Baltimore house prices don't start rising to any significant degree for longer. Prices didn't come down as much as I thought, so that means affordability hasn't improved as much as I would have hoped for. ... Prices need to fall a bit more to sufficiently restore affordability based on incomes and effective rents in the Baltimore metro area."
What's the magic number? He thinks an affordable median price for the metro area is around $210,000 to $220,000. Right now, as measured by MRIS, it's $250,000.