McHENRY – The housing market won't hit bottom for at least six to 12 months, and when it does, the journey to rising home sale prices will be "slow and gradual."
That's what economist Michael Moebs told a crowd Friday at a McHenry Area Chamber of Commerce luncheon, where he analyzed economic indicators, the federal stimulus program, and their ties to the national political scene.
Moebs predicted that unemployment would reach heights of 13 percent by late 2010, and about 1.5 million out-of-work Americans would stop receiving unemployment benefits over the next year.
"That means more foreclosures," said Moebs, who owns a Lake Bluff-based economic research firm, Moebs Services.
Beyond the foreclosures tied to the ranks of unemployment, he anticipated that about 1 million other Americans would lose their home because their mortgages would be repriced in coming months. When the housing industry does recover, he anticipated that it wouldn't return to thriving levels, but that home sale prices slowly would rise by about 6 percent.
Moebs offered mostly a grim outlook at the next 18 months, but political forces at work are related to the rate and time line of recovery.
Many areas such as McHenry County have received funding for infrastructure and road improvement projects, but a large portion of the stimulus funds are being held back "so that everybody will look good" before the 2010 election, Moebs said.
"2010 is a census year. The party who is in control in the House of Representatives will determine districting for five elections," Moebs said.
He also said that a sign the economy still was struggling to reach bottom was that business travel remained down, and there had been a spike in community college and technical school enrollment.
"[Workers] want to switch jobs. They want a better job, or they lost their jobs and want to switch their skill sets," Moebs said.
In response to the rising unemployment figures, those who still have jobs have become more efficient employees to make up for co-workers who were laid off. He said that nationally, the business sector had seen a 5 percent rise in productivity.
"They're keeping their staff but cutting down to a 35-hour or 30-hour work week," he said.