US residential real estate recovery hampered by poor job prospects, experts claim
Property prices in the US are steadily moving upwards but unemployment prospects and lack of credit are dampening the recovery, it is claimed.
The latest Standard & Poor’s widely watched 20 city Case-Shiller home price index posted a small gain between April and May. It rose 1.3% sequentially.
The last seven months have been basically flat, according to S&P index committee chairman David Blitzer. ‘Since reaching its recent trough in April 2009, the housing market has really only stabilized at this lower level,’ he said.
‘Concerns about business conditions and the labour market are casting a dark cloud over consumers that is not likely to lift until the job market improves,’ according to Lynn Franco, director of the Conference Board Consumer Research Center.
But the fact that sales are also increasing is encouraging. The latest figures from the Commerce Department show a rise in sales of new homes in the US for the month of June, but it was the second slowest since records began in 1963.
The US residential property market recovery has bee set back slightly by the ending of the Government tax incentive which expired at the end of April. The end of the Government’s tax credit initiative, which provided up to $8,000 for new buyers and $6,500 for current owners who buy and move into another home, had boosted the housing market.
However, as the effect of the tax credit continues to fade over the next few months, sales and activity are expected to dwindle. And the latest data from the National Association of Realtors (NAR) shows a further fall in sales of previously owned homes in the US in June, the second consecutive monthly fall. The NAR said sales fell 5% in June to an annual rate of 5.37 million units.
At the same time foreclosures are still increasing, although it is slowing. They rose in 154 of 206 US metro areas in the first half of 2010 over the same period in 2009, the latest figures from RealtyTrac show.
Metropolitan Statistical Areas (MSAs) in four states, Florida, California, Nevada and Arizona, accounted for the top 20 foreclosure rates in the country. Florida had nine of them, followed by California with eight, Nevada with two and Arizona with one.
The Miami-Fort Lauderdale-Pompano Beach MSA in Florida had the highest foreclosure total in the first half of 2010 with a total of 94,466 properties received a filing, up 11% from the first half of 2009 but down 8% from the second half.
‘While we’re seeing early signs that foreclosure activity may have peaked in some of the hardest hit markets, foreclosures continued to rise in three quarters of the nation’s metropolitan areas in the first half of the year,’ said James Saccacio, chief executive of RealtyTrac.
Saccacio said job growth is the only thing that can sustain the fragile stability some of these markets have achieved. ‘If unemployment remains persistently high and foreclosure prevention efforts only delay the inevitable, then we could continue to see increased foreclosure activity and a corresponding weakness in home prices in many metro areas,’ he added.