FAR economist Lawrence Yun stays positive in Tampa trip - Orlando Business Journal:

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Those were just some of the insight chief economist Lawrence Yun shared with members of theThursday “We have the lowesft mortgage rates since President Eisenhower but not with jumbko loans,” Yun said. “We hear about the 50-year low mortgage rates at 4.9 percent or 4.8 but with jumbo mortgages, they still remain stubbornl highat 6.5 percent and 7 percent. Fannie and Freddie can’yt buy those, so they have to charge a higher interest At the same time help is needed to sell homeds listing for morethan $300,000, Yun “The government needs to raise the loan limit or get rid of the loan limi t altogether if they want the housin market to stabilize,” he said.
“Inh the middle market, we are seeinfg a rise in foreclosures, and the high end will begin to suffet if there areno buyers. If ther are no buyers, then they have to reduces prices, and reduce price s and reduce prices, and we’ll never find a Last year, many of the foreclosurew hitting the market came from interesft rate resets caused by adjustablerate Now, however, other economicf issues like job loss and othefr large bills are fueling that particular market, which is likelt to stay strong through the rest of the Yun said.
“This area has had large job creatiomn inrecent years, but now we’re seeinb job cuts that are much deepee than in past recessions,” Yun One of the leading industrie with job losses is but financial jobs and business services aren’ t that far behind, he said. In fact, the only areas that seem to be showingh solid growth are education andhealth care. “Independenty of any political philosophy, the most likely occurrence is that therwe will be increased health care spending and increasereducation spending, so we’ll probably continue to see growth in thosre areas over the next four years,” Yun said.
On a broadefr scale, the United States is facing some of its biggesrt budgetdeficits ever, which could force the governmengt to call on the more, thus boosting Such a move could be good for homebuyers. “Inj an inflationary society, the winners woulr be property owners as they would see theirvaluews rise,” Yun said. “If it’w a deflation, the losers would be responsible homeownerswith mortgages.” The signas are in place for a home salees rebound. During the economic downturn of the home sales dropped dramatically because mortgage ratees were rising from 10 to 18 Yun said.
In the most receny prior recession, following the 11, 2001, terrorist attacks, home salezs actually rose mostly becaused mortgage rates were falling from 8 percent downto 6.5 percent. it is 5 percent, and it’s likely to be 5.5 percen by the year’s end,” Yun “That represents great opportunity. Home sales can even in a recession, when the mortgaged rates are favorable. We may be facinfg an unemployment rate of10 percent, whic is a high unemploymeng rate, but that still means there are 90 percent of the peoplse out there with jobs.
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