When Will Homes Return To Peak Values? | 2010 Real Estate Predictions
HREU Students (and future students)…be ready to have an answer to this question…
“When will homes be worth what they were in 2007?”
Some believe that the ‘recovery’ will take 10+ years…while others have the opinion that the recovery will happen much faster..
Read this post and let us know what you think…
Source: Channel4.com
Recent increases in house prices are a “false dawn” and property values will not return to their 2007 peak for at least another five years, research has claimed.
There has been a run of positive data on the housing market during the past few months, with most major house price indexes showing price rises, while mortgage lending for house purchase has also picked up.
But the Ernst & Young ITEM Club said, while these figures indicated the property market may be stabilising, the recent rise in house prices could not be sustained beyond the spring of next year.
Instead the group said it expected renewed price falls during the first half of 2010, followed by two years of stagnant prices, after which the cost of property will gradually start picking up as the wider economy strengthens and credit conditions ease.
But it warned that it expected it to be at least five years before house prices returned to their autumn 2007 level.
Hetal Mehta, senior economic advisor to the Ernst & Young ITEM Club, said: “ITEM believes the current stabilisation in the housing market is a false dawn.
“Price rises largely reflect the acute shortage of available properties, with many homeowners either trapped in negative equity or reluctant to sell for fear of locking in the losses of the past two years.
“A small number of cash-rich buyers have supported prices, but the supply of these funds is limited, which means prices are likely to dip again in the first half of next year.”
The group said 56% of homeowners had a mortgage, so it would be difficult for there to be a sustained pick up in the market without a recovery in mortgage lending.
But it said such a recovery appeared to be some way off, as banks were continuing to restrict the amount of money they advanced, as they instead looked to strengthen their balance sheets.
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I agree with this prediction – that it will take some time to burn off the incoming REO inventory and that there will be more as we are still in the peaking periods for the ARM readjustments. I give it 5-7 years and have some question as to ever reaching the false high price peak that we saw again.
I think it will take 15 – 20 years before we come out of this mess. Confidence is at an all time low regardless of what the TV likes to tell us. Unless we can start manufacturing again and rely less on buying useless items from China we are sunk. Where is the money going to come from to buy these houses with unemployment rising all the time? Our population is aging and that changes everything. It will take a generation to bring back confidence and trust.
I believe it will be a good 10 years before we see an aggressive R/E market return. I believe we will continue to stay in a “W” economy, with more peaks and valleys to endure. We have to get through the next foreclosure waive, and the commercial market issues before residential can begin to return to “normal” (I use that word cautiously).