Economy May Recover This Year, But Housing Market Won’t

By Kyle Chezum Updated on 1/17/2011

1/17/11

Eric Rosengren, president of the Federal Reserve Bank of Boston, expects the economy to rebound this year with a 3.3% growth of GDP.  But he doesn’t think the housing market will have anything to do with it.  In fact, he expects housing to remain in dire straits for some time.  "In many areas of the country the impaired balance sheets of borrowers, high foreclosures, and high vacancy rates imply a long time before local housing markets normalize," he said.

Rosengren attributes much of the instability in the housing market to lower home values, tightened lending standards, and overall unemployment, factors that are expected to continue through the remainder of the year.

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