Freddie Mac Sees A 'Cooling Market'

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The April 2006 Economic Outlook from Freddie Mac is upbeat on housing, but signals skepticism about the issue of housing affordability in the West (Welcome to my nightmare):

The cooling housing market in 2006 will deflate some of the affordability pressures as house price growth moderates to the single digits. Additionally, long-term interest rates will rise modestly; we estimate that the 30-year fixed rate mortgage will end the year at a moderate 6.5 percent. We expect a slight decline in single-family originations by 13 percent to 2.45 trillion dollars. The labor market will continue to be solid in 2006 and beyond; we forecast that unemployment will be below 5 percent for the next two years. The lingering question is whether affordability will increase in the West and job creation will return to the Midwest.

-- The Boy in the Big Housing Bubble/Los Angeles and Beyond