Economists predict there will be further declines in homes prices, new construction starts and the number of home sales, while mortgage defaults, foreclosures and unemployment rates continue to climb. It is the simple supply and demand theory…a “turn around” will not happen until the quantity of unsold homes that are on the market decrease. There are too many homes for sale on the market with not enough buyers in the market to purchase them. Buyer confidence is at an all time low for making significant purchases in this economy when the uncertainty of employment stability looms over all our heads.
To make matters worse, a risk index predicts that 97 % of the nation’s metropolitan areas had a greater probability of home prices falling over the next two years. In addition, over half of these metropolitan areas have a risk index of home price declines greater than 50 %.
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Economists See Deeper Housing Woes This Year
Source: Associated Press on MSNBC.com
Posted: January 20, 2009
“We do expect ’09 to be the down year, to be the bottom,” David Crowe, chief economist for the National Association of Home Builders, said during a news conference at the International Builders’ Show, which runs through Friday.
The outlook reflects grim forecasts that call for home prices, new construction and home sales to decline this year, while mortgage defaults, foreclosures and unemployment continue to rise.
That dynamic has kept the housing market mired in a slump and home builders large and small in the red. The U.S. economic downturn, meanwhile, has crippled any hopes for a near-term housing recovery. Crowe said he expects the number of new homes constructed to fall by
29 percent this year from last year, but then jump by 34 percent in 2010. He sees new home sales falling 14 percent this year.
“But we are expecting that trough to occur sometime in the middle of this year, and for us to come out the other end of ’09 on an upswing,” Crowe said. He noted that the upswing won’t be as strong as in previous recoveries because there are too many unsold homes on the market. “We won’t be able to get through those in one year, and we’ll still probably have house price declines,” Crowe said.
Homebuilders have stepped up incentives, lowered prices and cut back on new construction, but they aren’t likely to see better days until the rate of foreclosures slows and home sales pick up, he said. That’s unlikely to happen for many months, however, because consumers’ confidence in the economy remains shaken, and the job market will probably continue to deteriorate through the rest of this year, Crowe said.
The builders’ trade group has been lobbying for Congress to enact a stimulus package that will entice buyers to enter the market through a combination of a tax credit and lower mortgage rates. Crowe said the stimulus package being considered by the Obama administration would provide some relief to homeowners facing foreclosure, but not spur new home sales.
Not surprisingly, Nothaft’s outlook also calls for default rates on mortgages to keep rising this year, particularly on home loans made to prime borrowers. He also expects home prices to continue to decline into 2010, but says the housing market should begin to show signs of improvement beginning in the second half of this year as government efforts to stimulate the economy kick in.
David Berson, chief economist for mortgage insurer The PMI Group Inc., said the company’s latest risk index shows that 97 percent of the nation’s metropolitan areas had a greater probability of home prices falling over the next two years.” The risk went up … almost everywhere,” Berson said. In more than half of the major metro areas, the risk of home price declines was greater than 50 percent, he added. The panel cautiously noted that low mortgage rates, falling home prices and population trends bode well for a turnaround — eventually.
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The information herein is believed to be accurate but not guaranteed and may be subject to errors, omissions and changes without notice. This is not to be construed as a solicitation of property presently listed for sale. All information is derived from the Palm Beach County Property Appraisers website and the MLS.
All information is derived from the Palm Beach County Property Appraisers website and the MLS.