Smalltownbanker

Once the Job Market Comes Back, The Housing Market Will Cure Itself

First you must acknowledge that the homeowners who are losing their homes to forclosure are unable to return to the market and qualify for a mortgage for a minimum of 3 years since subprime lending is essentially gone. Assuming that the housing market will recover as soon as the job market recovers is naive.

In order for the job market to recover housing must begin to stabilize and that will not happen until the people who cannot afford their homes have lost them or their mortgages have been successfully modified by the servicers. I expect to see housing stabilize in about 12-18 months followed by a recovery in jobs.

I also expect that new home construction recovery will be slow and that there will be significant differences in what is built. Smaller, more efficient homes will replace a significant portion of the McMansions.