Financial experts predict slow start to US property recovery

New reports push back recovery prospects for US market

Those expecting the US real estate market to recover in 2010 may be in for a long wait with the latest report from analysts indicating that there will be no increase in values in the first six months of the year.

According to HSH Associates, a New Jersey based financial publishing house, the outlook for the first half of 2010 is flat. ‘Rebuilding equity is going to be a long time coming even in a reasonable interest rate environment, even with reasonable appreciation,’ said HSH Vice President Keith Gumbinger.

According to the Standard & Poor’s Case-Shiller index, which tracks changes in the value of residential real estate in 20 metropolitan regions, prices have fallen 32.6%, peak to trough, between 2006 and the third quarter of 2009.

HSH is predicting a flat real estate market with no increase in value through June 2010. Then, from July 2010 through August 2011, a period of 14 months, prices are projected to increase at a rate of about 2.5% a year. And from then on the company is predicting a yearly gain of 3%.

‘We could end up running through a whole other recession cycle,’ warned Gumbinger, adding that the US economy tends to fall into a business-cycle contraction every 10 years or so.  ‘House values could move up more strongly or more weakly, depending on any number of circumstances,’ he said.

The report comes as government-sponsored mortgage company Fannie Mae revealed a rise in the number of serious delinquency rates, up to 5.29% in November 2009, the latest month of data, the highest in recent memory.

That number grew from 4.98% in October and  more than doubled the 2.13% in November 2008, according to its monthly summary.

And lenders are warning of an increase in strategic defaulting where struggling home owners deliberately stop paying their loans and move out.

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