The only housing ‘recovery’ of any significance will be in the markets where jobs are being protected or created. Let me list those places:
1. Washington D.C.
Every other market will continue to suffer. It’s just a matter of how much.
Actually, any real housing recovery will depend where you live.
Generally in a regional housing recession you are talking 7 years. So if you use 2005 as the burst in San Diego housing, perhaps we’re talking 2012. The problem is we have artificial foreclosure moratoriums, artificial incentives (Federal:$8000 handouts first 1st time, and $6500 for repeat, California $10.000), and artificial interest rates. Not to mention FHA giving out 3.5% mortgages to almost the entire country – and more or less repeating much of the mistakes of the previous 5 years. Many people now allowed to go into homes once more with $0 down payment once they apply their $8000 handout to the down payment.
What the market would look like at 6% 30 year mortgages and no handouts from government to buy houses? The answer might well be another 10-15% downdraft. But we live in some parallel housing market that lives outside the “functioning market” – some form of governmental/Fed suspended reality.
That said, if you live in Washington D.C. you probably ask “what recession? what housing downturn?” If you live in Detroit you are thinking which parts of town will be turned back into farm land.. So it is too broad a question of when we will see a housing recovery. As they say, real estate is local, and we must look at the country region by region (or state by state) again. San Diego home prices will have a totally different recovery timing and percentage than will homes in Detroit.
The mortgage industry has been as volatile as ever lately–especially with interest rates, loan programs and the housing market in general. Unlike the past, we are in unchartered territory as far as economic models go.
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