Editor’s note: There is some division among experts in the housing industry on whether housing will continue to recover going in to the second half of 2014 or will face a fall.

HousingWire is asking for a significant amount of expert contribution in an attempt to draw a consensus based on a compendium of views.

In this article, Tom Showalter, a long-time contributor to HousingWire and chief analytics officer for Digital Risk gives us his take.

He sees 4 factors weighing down the housing market going into the second half of 2014.

Here they are:

1. Price appreciation will weaken

Unless there is some very specific micro economic event happening in any given MSA, median income growth (decline), complemented by anemic growth in wages per worker, strongly suggests that the era of housing price appreciation may be short lived. Outside of certain micro economies (NY Metro, Washington DC, Northern California, and Miami), the general economic outlook is weak. 

The median household income in 2007 was 55,000; as of 2014, it is 51,017, creating an 8% drop.  What is not revealed by this set of statistics is that small drops in median household income often are coupled with big drops in discretionary household income.This decline in median income suggests very low year over year changes in wages per worker. 

Ultimately, wage & income growth drives housing prices, and this growth is not really happening. Hence, the housing price revival may stall and with it so will home sales and purchase money mortgages, which are showing signs of retreat.

2. Housing will not collapse

Juxtaposed to the anemic growth in wages is a robust growth in housing prices, but we aren't back in 2007. Appreciation is slowing, but a collapse is not imminent. Don't pay too much attention to the recent spike in price-to-income ratio used to measure housing prices across the US (it has jumped in recent years to ~4.0, when the historical average is closer to 2.6.)

While some experts argue that this is a sign of a bubble in the making, this statistic is skewed as a result of an influx of cash buyers. In recent months, 40% of all sales have been paid in cash. The remaining 60% of the sales were made using loans. This 60% distribution represents a skewed, biased distribution, one that has eliminated the high income, high net worth folk who would normalize the price-to-income ratio and reduce it down to its more normal levels.

Given all of the statistics about who is buying a home (high FICO, low DTI borrower), the affordability of housing, the source of demand and the preceding cash purchase trends, it is extremely hard to believe that today’s housing market is as inflated as the 2007 market.

For today’s market to be that inflated, it would mean that the typical borrower was lower income, lower net worth. In this market, the borrower has the opposite profile, and there are too few homes with excessively inflated prices. Except for a few MSA’s, housing price increases have slowed and prices have barely returned to 2003 levels.

3. Some market segments will struggle

There are issues with 3 major segments of the market, suggesting that the housing markets problem is being caused largely by a lack of primary demand, even though houses remain affordable and interest rates are low. 

1. First Time Homebuyer 

This market is hampered by a lack of new household formation, which was negative throughout 2013, turning mildly positive in 1Q14.  That trend, complemented by a lack of high paying jobs and excessive student debt, is reducing the ability of this segment to generate robust housing purchases.

2. Move-Up Buyer

CoreLogic reports that the number of households underwater has decreased, with the current number approximately 6 million.  Nonetheless, this segment, which usually has substantial money to post a sizeable down payment, has been constrained by the housing price declines of the meltdown.

3. Baby Boomer

This segment is seeking to downsize and get into smaller, lower maintenance housing.  However, they are running into unexpectedly low prices on their existing residences, which are hampering their move- down plans.

Millions of baby boomers are continuing to work, due in part to their high level of health, to the reduced state of their net worth and to the unpredictability of our economy. Those that who have had the children leave the nest and those who are retiring are definitely downsizing their residences.

The impact on the housing market will be a softness in the large, suburban track home, the one-time mainstay of the baby boomer with a family.  Their former owners no longer need the space and those who are younger are incurring a number of wealth challenges: downward pressure on income, fewer promotion prospects and meager equity in their current residence, blocking the traditional move-up sale.

4. Decline in wages are a serious issue

What I am seeing is a long-term upward trend (increases in housing prices, housing starts, home sales) from 2007 to today; that’s the good news.

Lately, I am seeing volatility in the numbers, which can suggest many things.  What I think it means is that the fundamentals of the economy are starting to impact the housing market.

GDP growth since meltdown has averaged less than 2% - this not enough to replace jobs or generate long-term confidence. On top of underwhelming GDP, the decline in the median wage is persistent, a serious long-term issue. 

If we achieve 1,000K housing starts this year and approximately 5 million in home sales, we will be lucky and that is with very low interest rates and attractive levels of affordability.

We should not expect more until we solve the dilemma of wage/income growth (and with it – GDP growth).