FAR economist Lawrence Yun stays positive in Tampa trip - Tampa Bay Business Journal:

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Those were just some of the insights chie economist Lawrence Yun shared with members of theThursday “We have the lowestt mortgage rates since President Eisenhower but not with jumbo Yun said. “We hear abour the 50-year low mortgage rates at 4.9 perceny or 4.8 percent, but with jumb mortgages, they still remain stubbornly highat 6.5 percent and 7 Fannie and Freddie can’g buy those, so they have to charge a higher interesg rate.” At the same time help is needed to sell homesa listing for more than $300,000, Yun “The government needs to raise the loan limit or get rid of the loan limit altogether if they want the housing markert to stabilize,” he said.
“In the middle market, we are seeingy a rise in foreclosures, and the high end will begij to suffer if there areno buyers. If thered are no buyers, then they have to reducw prices, and reduce prices and reduce and we’ll never find a bottom.” Last many of the foreclosures hittinbg the market came from interest rate resetxs caused by adjustable rate mortgages. Now, however, other economixc issues like job loss and othee large bills are fueling thatparticular market, which is likelu to stay strong through the rest of the Yun said.
“This area has had large job creationm inrecent years, but now we’re seeing job cuts that are much deeper than in past recessions,” Yun said. One of the leading industrie with job losses is but financial jobs and business services aren’t that far behind, he said. In the only areas that seem to be showing solixd growth are education andhealth care. “Independen t of any political philosophy, the most likelh occurrence is that there will be increased health care spending and increasededucation spending, so we’lp probably continue to see growth in those areaw over the next four years,” Yun On a broader scale, the United States is facingv some of its biggest budget deficitd ever, which could force the government to call on the thus boosting inflation.
Such a move coulfd be good for homebuyers. “In an inflationary the winners would be property owners as they would see theirvalued rise,” Yun said. “If it’sa a deflation, the losers would be responsible homeowners with The signs are in place for a homesalez rebound. During the economic downturn ofthe 1980s, home saless dropped dramatically because mortgagre rates were rising from 10 to 18 percent, Yun In the most recent prior recession, following the 11, 2001, terrorist attacks, home sales actuallyt rose mostly because mortgage rates were falling from 8 percent down to 6.5 “Today, it is 5 percent, and it’s likelyt to be 5.
5 percenty by the year’s end,” Yun said. “Thatt represents great opportunity. Home saleas can rise, even in a recession, when the mortgagw rates are favorable. We may be facing an unemployment rate of 10 which is a highunemploymentg rate, but that stilpl means there are 90 percent of the people out theree with jobs.”