Full recovery for the nation’s housing market may be delayed another 15 years in the hardest hit markets, while other areas could see a swift rebound. Despite a promising second half of 2009 for home sales, this February’s loan delinquencies were well above last year’s level, and the backlog of foreclosed inventory continues to swell. See the following article from Property Wire for more on this.
Residential real estate markets in the US that experienced the greatest inflation in house prices, including certain metro areas in California, Florida, Arizona and Nevada, will not see a return of peak level growth before 2025, it is claimed.
Prices are expected to fall further this year and the recovery is predicted to be long, but some areas could see property prices recovering before 2010, according to financial services technology provider Fiserv.
‘Nationally, the data points to a further 7% decline in home prices through the end of this year, with a prolonged recovery beginning early in 2011. In many markets, the emphasis is on the word prolonged,’ said Fiserv chief economist David Stiff.
Other factors besides a run-up in house prices are dragging down recovery times in the industrial Midwest including Michigan, Indiana and Ohio where steep job losses in the manufacturing sector could keep housing demand low for some time. But the data is not uniformly grim across all states, Stiff added.
A number of trends have defined initial signs of recovery in the housing market in recent months, including rising home sales. In particular, Pittsburgh, Columbia, and several metropolitan areas in Texas, Washington and upstate New York could see peak level prices return within the next few years.
‘We see several powerful forces in the market that will severely hinder the housing recoveries of many metro areas, particularly in the hard hit states of California, Florida, Arizona and Nevada. It will take these markets 15 or more years before home prices climb back to their peaks,’ explained Stiff.
While the bubble markets have received the greatest attention, there are other dynamics affecting the pace of home price recovery in other regions. A protracted recovery in home prices is also expected in many urban neighborhoods where predatory lending was most rampant. There, home prices rose rapidly from very low levels during the bubble years. These markets include neighborhoods in cities such as Minneapolis, Memphis and Chicago.
‘Our analysis projects that some markets are poised for a relatively fast recovery, including some areas that never experienced large declines in prices,’ Stiff added.
He also reiterated a number of trends that have defined the housing market in recent months, including signs of strength that emerged in the third and fourth quarters of 2009. Home sales grew dramatically, jumping from 4.5 million units in January to 6.5 million units in November 2009, the highest gains since 2006.
This was attributed to lower prices, almost record low mortgage interest rates, and the $8,000 tax credit for first time home buyers. Another factor that temporarily slowed the erosion of home prices has been the financial institutions’ inability to effectively sell homes with distressed mortgages, he added.
But the number of US property owners facing loan problems is not decreasing. The number of mortgages delinquent at the end of February 2010 is 21.3% higher than the same time last year despite government led modification efforts, according to the latest monthly report from Lender Processing Services.
Both delinquent and foreclosure inventories remain bloated as high volumes of problem loans remain held up in pipeline due to loss mitigation efforts and foreclosure moratoria, LPS says in its latest report.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.