"It's a tough time right now, but at least there is hope somewhere out there in the distance," said NAHB's chief economist David Crowe, who joined Witten to provide a comprehensive economic overview that was focused on the housing correction in general and the apartment and condo sectors specifically.

Crowe began his presentation detailing why there has been a continued fall in housing, and how a housing downturn became a national recession. "There were a couple of things that compounded at the same time, such as mortgage stress and housing price declines," he said, continuing that although Florida, California, Arizona, and Nevada were poster children for particularly bad markets, the bad has now stretched everywhere else.

Using detailed slides to illustrate where multifamily and single-family housing is today, Crowe explained that, to no surprise, "the trend of foreclosed houses has grown. And as long as housing values continue to fall, we will continue to add to those homes that are under water," Crowe said. "There is still in the neighborhood of a half a million pushed into foreclosure per quarter. It is beginning to spread itself across lots of places."

He also noted that the number of vacant homes on the market has increased, the condo stock has increased significantly and the single-family vacant for sale is kind of the base of the iceberg. "It is the excess of the inventory and it has risen dramatically throughout the last couple of years," he said.

The second quarter of this year will be negative, Crowe forecast, but then it will be positive, he said thanks to his great deal of faith in the recovery package/stimulus efforts. "But that doesn't mean we will have employment right away," he said. "We will continue to see job losses through this year, but it will eventually trough out late in '09 and 2010."

Crowe's optimism stretched as far as to say that sales should bottom out this quarter. "I am putting a lot of faith in some of these still not so great numbers that keep coming out this month," he said. "I am thinking that by the end of second quarter, there will be a positive growth of sales," adding that the later end of the year will be the start of a recovery. "We will begin to absorb some of the excess houses, while we build some."

Following Crowe, Witten commented that his expectation is that there will be deep losses in 2009, 2010 will be flat and 2011 will be recovery. He explained that "if you are looking hard for good news, it is that we [home builders] aren't as bad off as everyone else, but we are in for some tough times in the housing market at large for a good while."

The reality is in fact that there is a silver lining to this very dark cloud, Witten noted. "Once jobs come back, we think we will see (in 2011) more apartments rented than ever before."

Witten closed his presentation noting that if you are in the development business, you want to deliver in 2010 or after and that if you are in the acquisition side of the business, you want to be buying late 2009 and into 2010. "While there is a difference from city to city, this recession we are in is so deep, and the housing competition is so intense that we don't think any of the housing markets will have rent growth," he said. "We expect some real challenge here in the short term and will get in good position for 2011."

Instant Insights /

Experts Predict Multifamily Heaven in 2011

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