In its most recent report, Moody suggests that full recovery in the housing market is likely to be at least a decade away, but property prices should begin to stabilize in the interim. Declines in foreclosures in hard-hit California are one promising indication, yet the effect of federal loan modification programs could actually be distorting the appearance of improvement on this front. See the following article from Property Wire, for more on this.
There are signs that the number of foreclosures are falling at last in the US but experts are warning that it could be a decade before the property market returns to peak levels.
The latest figures from ForeclosureRadar show that the number of distressed filings in California, one of the worst hit states in the country, fell in August.
Notices of default in California, which is the first step in the foreclosure process, dropped from July to 36,396 filings, a monthly dip of 19.1% and a 14.2% decrease from August of last year.
In a report the firm says that the government’s Home Affordable Modification Program which provides cap incentives to servicers for the modification of loans in default or on the verge of default, appears to be having a positive impact.
But Sean O’Toole, founder and CEO of ForeclosureRadar, said that the program could be hiding the true picture.
‘In effect the HAMP postpones a large amount of filings,’ he said. If it fails, the market would need further government intervention or there would be a wave of new foreclosures, he warned.
But overall the outlook for recovery is still muted.
According to the latest analysis from Moody’s it will be at least another 10 years before residential property prices return to the peak levels of 2006.
Analyst Celia Chen said that housing prices will decline for another year with housing bottoming out in the second quarter of 2010 before rebounding.
‘The correction will be not only deep but also lengthy.
The national price level will not regain its 2006 high until 2020, a peak-to-peak housing cycle of 14 years,’ she added.
According to the report, property prices will regain normalized rates of appreciation during the first five years of the recovery.
But the decline in prices and the subsequent recovery vary by region to region.
In some states, prices will decline 6% or less and recovery will come before 2014.
Other areas that have experienced declines of more than 46% won’t get back to 2006 prices until 2023.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.