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Best case scenario for housing? Economist says drifting lower is the answer

The path to recovery

The Mortgage Bankers Association reports that mortgage application volume is up 21.7%, but most of the volume is refinance loans, with home sale loans remaining relatively stagnant.

Home values have dipped one third from their peak according to Zillow and their Chief Economist Dr. Stan Humphries forecasts a bumpy road ahead.

Housing remains a struggling sector and while there are still hotspots like Washington, D.C. where values are performing well as are sales, on a national scale, residential real estate is hurting.

Economist Barry Ritholtz in the video above notes that the best case scenario for housing is to “drift lower.” Other entities suggest the way forward with some claiming real estate flipping is the answer to economic recovery while others are suggesting that banks experimenting with cleaning up the books by demolishing foreclosures rather than selling is the answer, while others believe that turning REOs into rentals will save housing. The National Association of Realtors’ forecasting is cautiously optimistic while some pundits claim housing won’t see a recovery even in coming years.

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Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.



  1. Manhattan Beach Realtor

    August 15, 2011 at 9:18 am

    It's tough to see outside the bear market lens right now, but markets can turn on a dime, one way or another. It would be ideal to have flat, to slow trend in either direction…at least people would be able to plan accordingly. What we don't need are major disruptions to smash expectations.

  2. Greg Cook

    August 15, 2011 at 5:27 pm

    Of course! the solution to the jobs and ergo housing, let's bring in 2-3 million more people to take the jobs.
    The solution is to figure out more ways to get first time home buyers in the market.

  3. Ruthmarie Hicks

    August 16, 2011 at 4:14 pm

    Are they kidding…??? Have any of these clowns ever spoken to a Ph.D. from a high tech field? If they did they'd get an earful. I have a Ph.D. and am by trade a molecular biologist. The jobs dried up and the salaries tanked because of a GLUT from abroad. I'm in real estate because at least it can't be outsourced. These guys are smoking something they shouldn't. One of our problems our country has is that career paths that involve innovation require a massive educational commitment with terrible salaries. That's why we don't have qualified people in these fields. I was being paid less than $40k for a 70 hour work week in NYC. Sure, people are going to buy homes on salaries like that. This is a brilliant idea – NOT….

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