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.