Posted on Friday, December 10, 2010
More than half of Americans think the housing market will remain depressed for at least two more years, and 22 percent think it will be 2015 or later before home prices and sales rebound.
“I would love to say we have taken a few steps forward, but the reality is we are stuck in the mud,” said Peter Flint, CEO of San Francisco-based Trulia, which, with RealtyTrac, released the findings of their latest homeowner sentiment survey Tuesday during a conference call.
The robo-signing debacle, in which lenders are alleged to have used false documents and signatures to process foreclosures; tighter lending guidelines; and higher unemployment have only added to Americans’ predictions of continued doom and gloom.
Interestingly, however, there has been little fallout, thus far, as a result of the robo-signing allegations, with just a handful of foreclosures overturned by the courts so far, said Rick Sharga, senior VP for RealtyTrac.
Bank of America Corp., JPMorgan Chase & Co. and Ally Financial temporarily halted some foreclosures earlier this year while they investigated their practices. But they have since restarted foreclosures.
“November numbers suggest we will see a 20 percent to 25 percent drop in foreclosure activity with bank-owned homes because of the temporary delays due to the scandal, but those numbers should come back,” said Sharga. “We expect that Q4 numbers will be artificially low and Q1 numbers will be higher.”
South Florida is home to one of the biggest mortgage foreclosure firms in the country. Plantation-based attorney David Stern is also the target of an investigation by Florida Attorney General Bill McCollum for allegedly engaging in robo-signing. His associated business, DJSP Enterprises, which conducted support work for the firm, has been all but shuttered, with hundreds of employees laid off.
The fact that Americans perceive that a housing recovery continues to be so far into the future has resulted in a growing willingness to walk away from a mortgage on a home that is underwater.
In May, 41 percent said they would “strategically default” on their mortgage. That rose to 48 percent in October.
“If this continues, we will see an epidemic of strategic defaults,” Flint predicted.
Even record-low interest rates haven’t done enough to kick-start the housing recovery, noted Flint, who predicts that interest rates will creep up to 5 percent in the next year, which could further delay any recovery.
Flint said he expects home prices to fall between 5 percent and 7 percent, with most of the drop coming in the first half of 2011.
Florida Realtors reported that prices for existing homes and condos in South Florida were all down, year-over-year, in October.
Statewide sales of existing single-family homes fell 7 percent, to 41,122 from 44,451. The median price also fell 7 percent, to $135,200 from $145,300.
RealtyTrac’s Sharga said his best prediction is that home prices won’t begin to recover until 2014 because more people continue to hold out, believing that “affordability levels will get better and better,” he said.
Neither predict another government effort to stimulate sales, such as the homebuyer tax credit, which they said only served to artificially boost sales, but did nothing to create sustainable growth.
“The best thing the government can do is to create more jobs so that consumer confidence goes up and you get more buyers in the market,” Sharga said.
South Florida Business Journal - by Susan R. Miller