Property owners in US don’t see recovery until at least 2014, survey shows
More than half of US property owners and renters say housing won’t recover until at least 2014, reflecting a deepening pessimism about the real estate market, according to a new survey.
Some 54% don’t expect a recovery for at least three years, up from 34% in November, and those who see a turnaround by the end of next year fell to 15% from 27%, the survey by Trulia and RealtyTrac shows.
The real estate market is weakening and near record low interest rates and falling prices are fail to boost demand after the ending of the federal tax credit for homebuyers last year. ‘Demand remains weak, loans are increasingly difficult to qualify for and the shadow inventory of several million distressed properties is weighing down the market. All of these things need to improve before housing can recover,’ said Rick Sharga, senior vice president at RealtyTrac.
The rebound will be a long and gradual process, according to Pete Flint, chief executive officer of Trulia. ‘We have another 18 months until we start to see signs of price stability in the housing market,’ he said.
According to the survey, 45% of respondents said the government isn’t working hard enough to prevent foreclosures. But 17% said too much is being done, 16% believe the government’s response is appropriate and 22% said they aren’t sure.
The Treasury Department’s main foreclosure prevention programme, called the Home Affordable Modification Program, has resulted in about 587,000 permanent loan modifications, short of its goal of up to four million.
Hopes for a quick real estate recovery are waning as more home owners are affected by the foreclosure crisis. A third of respondents have or know somebody who has stopped making payments, walked away from a mortgage, applied for a loan modification or have lost a home through foreclosure or short sale, according to today’s report.
US foreclosure filings fell to the lowest level in three years in the first quarter amid a lender backlog in processing paperwork, RealtyTrac said. Foreclosure processing slowed after the state attorneys general and federal regulators began separate investigations last year of the mortgage servicing industry for the use of faulty documents and signatures to seize properties.
Christopher Mayer, senior vice dean at the Columbia Business School’s Paul Milstein Center for Real Estate in New York, said he expects the market to bottom early next year with the hardest hit states, including Nevada, Arizona and Florida, taking longer.
Moody’s Analytics has forecast that property prices will bottom out by September, with a decline of about 4% from December 2010 in the S&P/Case-Shiller index of values in 20 cities. The index will rise slowly through 2012, though growth won’t reach about 5% until the following year, according to Andres Carbacho-Burgos, associate director.