Smalltownbanker

A Few Unhealthy Home Purchase Statistics

Those South FL cash buyers are actually Medicare Fraudsters reported on 60 minutes last night but hey, at least they are putting some of the cash they are bilking from us back into the economy.

Real housing recovery is 2-3 years away. Over-inflated markets still have room to fall but some have reached bottom where land value is virtually nil and foreclosed homes are being sold for under cost to build. Next waive of declines in value will be inside the beltways in the city markets that have continued to hold much of their value. Presure from lower prices in the near suburbs will force them down.

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.