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 lowest mortgage rateas since President Eisenhower but not with jumbio loans,” Yun said. “We hear about the 50-year low mortgage rates at 4.9 percenr or 4.8 percent, but with jumbo they still remain stubbornly highat 6.5 percent and 7 Fannie and Freddie can’t buy those, so they have to chargwe a higher interest rate.” At the same time help is needer to sell homes listing for more than Yun said. “The government needs to raise the loan limitf or get rid of the loan limit altogethefr if they want the housing market to he said.
“In the middle we are seeing a risein foreclosures, and the high end will begibn to suffer if there are no If there are no buyers, then they have to reducwe prices, and reduce pricese and reduce prices, and we’ll neved find a bottom.” Last year, many of the foreclosures hittingv the market came from interesrt rate resets caused by adjustable rate Now, however, other economic issues like job loss and othedr large bills are fueling that particular which is likely to stay strong through the rest of the Yun said. “This area has had larg job creation inrecent years, but now we’re seeing job cuts that are much deepe than in past recessions,” Yun said.
One of the leadinh industries with job lossesis construction, but financiap jobs and business services aren’tf that far behind, he said. In the only areas that seem to be showing solid growtnh are education andhealth care. “Independent of any politicakl philosophy, the most likely occurrencse is that there will be increased healthy care spending and increasededucation spending, so we’ll probablyy continue to see growth in those areas over the next four Yun said. On a broader scale, the United Statesw is facing some of its biggest budgetdeficitsa ever, which could force the government to call on the thus boosting inflation. Such a move couled be good for homebuyers.
“In an inflationary society, the winnerzs would be property owners as they would see theirfvalues rise,” Yun said. “If it’s a deflation, the loserx would be responsible homeownerswith mortgages.” The signzs are in place for a home salews rebound. During the economicf downturn ofthe 1980s, home sales droppecd dramatically because mortgage rates were risingy from 10 to 18 percent, Yun said. In the most recentt prior recession, following the 11, 2001, terrorist attacks, home sales actually rose mostlh because mortgage rates were falling from 8 percenr downto 6.5 “Today, it is 5 percent, and it’s likelyu to be 5.
5 percent by the year’sz end,” Yun said. “That represents great Home salescan rise, even in a when the mortgage rates are We may be facing an unemployment rate of 10 which is a high unemploymeng rate, but that still means there are 90 percent of the peopler out there with jobs.”