Builders see housing turnaround in 2008

There might be a light at theof the construction site after all.

That is the word from housing economists as far as the housing market correction is concerned. At a recent National Association of Home Builders construction forecast conference, economists and analysts discussed the future of the housing market.

Home sales should bottom out by theof the first quarter of 2008, and I have starts up in the third quarter of next year, assuming the inventory overhang stabilizes," said NAHB chief economist David Seiders.

Seiders said the housing market should see a modest recovery in 2008 for several reasons.

Citing continued overall economic and job growth moving ahead at a reasonable pace, low inflation expectations and Federal Reserve Board interest-rate cuts, Seiders said the housing market's long- term potential is very good.

By theof 2009, we may be at a pace of 1.5 million units of new housing production," he said. "Once we are out of the woods, we should see good growth in front of us -- maybe 2 million per year."

For 2007, the homebuilders group is predicting sales of 828,000 new single-family homes and 781,000 in 2008, a 5.6 percent decline.

While most economists and analysts have focused on the subprime mortgage market meltdown and the credit crunch that followed as factors in dragging the overall economy, not everyone at the housing outlook conference saw them as significant problems.

Michael Moran, chief economist at Daiwa Securities America, said most of the reporting on the housing market has been exaggerated, especially the sub-prime meltdown, which makes up only 13.5 percent of the mortgage market.

Twenty percent of the sub-prime market is under stress," he said. "Twenty percent of 13 percent is less than 3 percent of the total mortgage market. The economy should absorb this shock."

Moran also said he was not as concerned as others with falling home prices.

We are seeing a gradual correction in home prices," he said. "So far, in my view, housing prices are holding up reasonably well."

Closer to home, things are already starting to look up, according to one local homebuilder.

I think you're going to find that right in this area people are starting to realize this is the bottom of the market and it is starting to go back up," said Charles Rinek, owner of Rinek Construction and a past-president of the Flagler/Palm Coast Home Builders Association. "We're seeing more activity."

Rinek said material prices have fallen, making homebuilding more affordable.

As a matter of fact, they are as low as they can possibly go," he said, referring to the decline in materials prices.

Rinek said in many ways, the housing market correction was a self- fulfilling prophecy.

There was so much bad press, people were getting nervous," he said.

But for those wanting to experience the Florida lifestyle with the Southern climate and the beach and everything else, "We still have it and they're starting to realize it," Rinek said.