Friday, January 14, 2011 - Article by: Michael Kraus - Total Mortgage -
This coming year is going to be a tough twelve months for the real estate market, barring unforeseen changes to the U.S.'s economic fortunes. There is a massive stock of houses still on the market throughout the nation. There is almost no demand for these houses. Elementary economics can be used to conclude that real estate prices are sure to fall unless there is a huge immigration of rick immigrants or we demolish a ton of the current unsold homes (which would be a horrifically stupid waste of resources).
Standard and Poor's reported that, at the end of the third quarter, the total value (principal) of mortgages foreclosed in 2010 was $450 B. Although this this is down from $460 billion in the second quarter, the rate at which the market is picking up these homes is slowing. With this pace, it will take almost four years for the housing market to absorb all these properties, up from forty months in the second quarter.
Home values have decreased an estimated 20-25% from their high point in 2006. Since home prices were shortly held up, prices started to decline a short while after those stimulus programs ran out in the spring. Property values have been going down in several areas for many months to date.
The lovely people at Zillow are not even as hopeful than the people at Standard and Poor's. Stan Humphries, Zillow's Chief Economist asserted:
"The back half of 2010 looked horrible and 2011 should look like the mirror image of that". Mr. Humphries is not painting an optimistic picture.
There's a chance you do not side with Case-Shiller/S&P or Zillow. But how do you feel about the outlook of media and real estate tycoon Mort Zuckerman? His prediction is that the glut of distressed homes will "put downward pressure on residential prices" and went on, saying "that's going to continue for several years". Refinance your mortgage now.
By this point you understand what I'm trying to say. I assume if you're looking at this article, you have your own google machine, and could find tons of bloggers who are predicting a sustained decline in home prices, an all-out double dip, or both. One could find some, though few, people who assert that housing should make a comeback in 2011. However, usually such people have a very obvious agenda, and I wouldn't value what they say too highly. Although contrarian thinking makes for good entertainment, I really can't see anything besides steady declines in housing prices this year (generally, certain areas will do better than other areas). What's your prediction for the housing market in 2011? Maybe you have information that I don't? Voice your thoughts in the section at the bottom.
Didn't find the answer you wanted? Ask one of your own.