Many factors play a role, but perhaps the biggest ones in 2011 will be jobs, interest rates, and foreclosures. The more people can get jobs, the more potential home buyers there are. That buoys the confidence of employed people, too, because they will be less worried about losing jobs. The job market is widely seen as improving, but how strongly is an open question.
Mr. Yun says he expects the economy to add 2 million new jobs this year, or about 167,000 per month – positive but not a rip-roaring pace given the roughly 8 million jobs lost during the recession. The big question is whether the lift from an improving economy will be offset by two negative factors, the drag of rising mortgage rates and the glut of distressed properties for sale.
