Expert: Slump end in sight
State's home sales will recover, he says
September 21, 2007
BY KATHERINE YUNG
FREE PRESS BUSINESS WRITER
The chief economist of National City Corp. predicted Thursday that Michigan's housing market would bottom out a year from now.
"We're starting to see the light at the end of the tunnel," Richard DeKaser said shortly before sharing his economic outlook with some of the bank's clients during a luncheon at Ford Field.
DeKaser said the state's steep decline in construction activity should end next year, but home prices will remain under downward pressure as the effect of massive job losses takes its toll.
He warned that employment growth in Michigan is likely to continue to lag behind the rest of the nation. But the declining value of the dollar should prove a boon for exports from the state's companies.
At the moment, however, many businesses are waiting to see what happens with the budget talks in Lansing and the negotiations between the UAW and Detroit's automakers before making any major decisions, said David Boyle, chief executive and president of National City's Michigan and northwest Ohio operations.
"There is a real wait-and-see mind-set in the business community," he added.
Unlike some economists, DeKaser isn't bracing for the national economy to take a nosedive because of the troubled housing market and tighter lending conditions.
He predicts that the nationwide drop in home sales will bottom out at year's end, and residential construction activity will take another six to nine months after that to stabilize.
"The good news is that the worst is behind us," he said.
DeKaser pointed out that housing accounts for only a fifth of a household's total net worth. He dismissed worries about a credit crunch, noting that the corporate debt markets are still working.
The housing downturn "will hurt consumers, but the overall drag on the consumer economy is likely to be relatively modest," he said.
September 21, 2007
BY KATHERINE YUNG
FREE PRESS BUSINESS WRITER
The chief economist of National City Corp. predicted Thursday that Michigan's housing market would bottom out a year from now.
"We're starting to see the light at the end of the tunnel," Richard DeKaser said shortly before sharing his economic outlook with some of the bank's clients during a luncheon at Ford Field.
DeKaser said the state's steep decline in construction activity should end next year, but home prices will remain under downward pressure as the effect of massive job losses takes its toll.
He warned that employment growth in Michigan is likely to continue to lag behind the rest of the nation. But the declining value of the dollar should prove a boon for exports from the state's companies.
At the moment, however, many businesses are waiting to see what happens with the budget talks in Lansing and the negotiations between the UAW and Detroit's automakers before making any major decisions, said David Boyle, chief executive and president of National City's Michigan and northwest Ohio operations.
"There is a real wait-and-see mind-set in the business community," he added.
Unlike some economists, DeKaser isn't bracing for the national economy to take a nosedive because of the troubled housing market and tighter lending conditions.
He predicts that the nationwide drop in home sales will bottom out at year's end, and residential construction activity will take another six to nine months after that to stabilize.
"The good news is that the worst is behind us," he said.
DeKaser pointed out that housing accounts for only a fifth of a household's total net worth. He dismissed worries about a credit crunch, noting that the corporate debt markets are still working.
The housing downturn "will hurt consumers, but the overall drag on the consumer economy is likely to be relatively modest," he said.
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