ATLANTIC CITY — The housing recovery should strengthen in New Jersey despite rising gasoline prices and volatile European markets, economists told a builder’s trade group Tuesday.
The forecast of modest growth in home values and new construction was relatively upbeat in the context of a still-bruised housing market.
“We’re likely to see home prices increase in the low single digits annually — 2 (percent), 3 (percent), 4 percent, which means we’re still about eight years away from getting back to peak 2005 and 2006 home prices,” said Jeffrey Otteau, of Otteau Valuation Group. “This is by no means a return to where we were, but it’s a start.”
A panel of three economists gave their outlook Tuesday afternoon at an economic forecast seminar at the Trump Taj Mahal Casino Resort.
The event preceded the 63rd Atlantic Builders Convention trade show in Atlantic City, hosted by the New Jersey Builders Association Wednesday through Friday at the Atlantic City Convention Center.
The economists pointed to positive economic signs tempered by major factors that can still derail a more robust recovery — from a major backlog of delinquencies and forecloses to skyrocketing gasoline prices.
The National Association of Home Builders/Wells Fargo Housing Market Index said U.S. housing starts in February were on pace for nearly 700,000 annually. That compares with 518,000 the year before, but is still far below prerecession levels.
Anika Kahn, a senior economist with Wells Fargo, said housing starts are expected to reach about 800,000 next year, a nearly 15 percent increase.
A more rapid recovery is not expected for a while.
“Even out to 2015, we still don’t think we’ll meet that 1.5 million (housing starts),” she said.
Home prices, however, may begin to see an upward trend.
“We think in the home-buying season, because of increased sales volumes and a little bit more positive environment, we’ll start to see very modest increases in home prices, definitely in those areas that did not experience the boom/bust cycle,” Kahn said.
The economists presented their forecasts in the midst of an economic recovery from a recession unlike any other.
This sluggish recovery has had longer-term effects on job and housing markets than in previous ones, said Joel Naroff, of Naroff Economic Advisors.
For example, many people do not think the country has emerged from the recession, even though it ended nearly three years ago, he said.
A very weak job recovery increased job insecurity, which reduced consumer confidence, stalled spending and meant businesses did not need to hire, Naroff said.
Now the cycle is beginning to turn positive as people become more secure about their jobs, he said.
The positive outlook comes after other improved housing data recently.
In the region, the number of homes sold in February increased from the year before. In Atlantic, Cape May and Cumberland counties, this represented a nearly 8 percent increase in the number of homes sold, according to Realtor-supplied figures.
While rising oil prices may mean gas prices will break $4 a gallon, the economy will be slowed but not stalled by those increases, Naroff said.
“There is significant momentum across the board in this economy. Although we’re not in a rocket taking off, we’re in a much greater growth pattern than we were last year,” he said.
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