Fannie Mae
Good decade predicted for housing
Economist sees short recession, mortgage debt more than doubling

By RICK ROTHACKER

Fannie Mae's chief economist on Tuesday predicted a strong housing market for this decade and a quick recovery from current economic doldrums.

By 2010, the nation's single-family housing mortgage debt will more than double to as much as $14 trillion from $5 trillion last year, said David Berson, citing Fannie's Mae's latest 10-year projections.

"We think (this decade) will be at least as good as the 1990s," said Berson, speaking to the Charlotte Economics Club. He expects mortgage debt to grow 8 percent to 10 percent annually this decade; it grew 7 percent in the '90s.

More mortgage debt translates into more loans, sales and construction in the housing market. The projections are based mostly on household and home ownership trends. Major demographic or economic changes could alter the predictions, he said.

Fannie Mae, short for Federal National Mortgage Association, is a government-chartered private company that works with lenders to make sure there is money available to the mortgage market.

As part of the current economic downturn, the housing market also is suffering now, Berson said. Low mortgage rates, however, should fuel a quick turnaround. He expects mortgage rates to average 7.2 percent this decade.

As for the overall economy, Berson also expects good news in coming months. With help from interest rate cuts and other government efforts to stimulate the economy, the nation's gross domestic product should grow 4 percent in the second half of 2002, he said.