Broader Housing Recovery Dependent on Job Growth: Harvard Report

As the housing market continues to face significant challenges, the strength of job growth has become a key to[IMAGE]

a broader and sustained recovery, according to the ""State of the Nation's Housing 2010"":http://www.jchs.harvard.edu/publications/markets/son2010/son2010.pdf report released Monday by the ""Joint Center for Housing Studies of Harvard University."":http://www.jchs.harvard.edu/index.htm

While improved affordability for first-time homebuyers and government intervention helped spark a turnaround and drove an increase in existing home sales last year, record foreclosures continue to pressure markets and millions of homeowners, the report said. As a result, a timeline for when the housing market will fully recover remains unknown.

""Many factors are still weighing heavily on the market,"" said Nicolas P. Retsinas, director of the Cambridge, Massachusetts-based Joint Center for Housing Studies. ""Elevated vacancy rates, record foreclosures, the expiration of the homebuyer tax credit, and continued high unemployment are all causes for concern.""

According to the report, the housing market will have to weather the expiration of the federal homebuyer tax credit, as sales activity may decline just as it did when the first round of credits expired in fall 2009. This time though, the improving labor market may be enough to avoid a similar dip, the report said.

""If history is a guide, what happens with jobs will matter the most to the strength of the housing rebound,"" said Eric S. Belsky, executive director of the Joint Center for Housing Studies. ""Right now, economists expect the unemployment rate to stay high, but if employment growth surprises on the upside or downside, housing numbers could too.""

The report said once employment stages a convincing comeback, demographic forces should lift currently depressed levels of household growth and spur increased construction and sales. In addition, the report explained that a bounce back in job growth will be a vital factor to how quickly loan distress will subside.