Housing Optimists Are “Not Paying Attention” to the Facts, Says Dean Baker

So does our guest Baker see the so-called housing recovery now? “No. I mean I think people that are saying that just aren’t paying attention to what’s in front of their eyes,” says Baker, an American economist and co-director of the Center for Economic and Policy Research.

“I think were going to see a big fall-off in purchases for the rest of 2010 and even into 2011, Baker says. So the idea that somehow the market is stable, that housing prices will rise anytime soon its really hard to make a case for that.”

Baker lays out several reasons for his bearish case:

Programs that lifted the market, including the tax credit for first-time buyers, have expired.


The Federal Reserve is exiting the mortgage market, which will likely push rates to 5.5% to 6% by the end of the year.


There’s still an inventory glut and rental rates are falling in many markets, notes Baker, author of “False Profits: Recovering from the Bubble Economy.” He says the rental market doesn’t lie.