Relief For The Housing Market is Not in the Immediate Future
After several stressful years, new numbers indicate that American homeowners still do not have much to look forward to. According to a new Reuters poll, the U.S. housing market will remain stagnant throughout 2011 due to continual foreclosures and high rates of unemployment throughout the country.
According to the poll, median home prices will rise by only 1.0 percent in 2011. This follows a dismal 2010, in which home prices increased by 1.1 percent. In comparison, the consumer price index will rise by 1.6 percent in 2011. Home loan delinquencies also recently rose for the first time this year, which means that the number of foreclosures will likely continue to increase in 2011, especially as lenders restart their repossession processes after last month’s foreclosure controversy.
According to economist David Berson, these numbers may indicate that the housing market has hit its lowest point. “Housing activity has likely bottomed, but the recovery will be slow and long-developing,” he said. One economist echoed this belief, stating that it may take a minimum of ten years for home prices to reach 2006 price levels. Others were not so optimistic, stating that prices may never recover. Homes are currently being valued at a staggering 35 percent less than 2006 prices.
However, before foreclosure and repossession will slow down, economists say, potential home buyers need to feel confident in the housing market. And before that can happen, other areas of the U.S. economy need to improve. “The simple fact,” said economist Paul Dales, “is that prices will not be able to rise when poor economic conditions continue to undermine demand and when foreclosures will continue to boost supply.”
Source: CNBC, “US Housing Market Will Struggle in 2011: Poll”, 18 November 2010