Laurie Goodman, senior managing director at Amherst Securities, believes one in five distressed homeowners in the U.S. are facing, or may face, foreclosure.
The analyst adds that little may be done to stem the tide of foreclosures without greater government intervention or significant principal reduction. Currently, she said 11.5 million home loans are non-performing or highly distressed.
Transition rates of negative equity homes are improving, however, from last year.
“Many banks are opposed to principal writedowns,” Goodman said. “Though it is interesting that they make good use of this for their own portfolios. We think before this crisis is over you will end up with a mandatory principal writedown program.”
Meanwhile, Mark Zandi, chief economist at Moody’s Analytics, maintained an optimistic tone on the future of the housing market. He expects home prices to be depressed into 2012, and adds that the knock-on effect from the robo-signing debacle will be minimal. “It’s not going to be a significant issue,” he said.
“Household formations will pick up,” he added, in a belief that supply will not greatly outstrip demand in the long-term. The current, large inventory will provide the main downward pressure on prices going forward.
Zandi said markets will improve overall, as mortgage rates hover around 4.5%. And, he adds, housing has reached the most-affordable levels in recent memory. “By this time next year we should see measurably better job conditions,” he said.
“We aren’t quite at the bottom yet, but we are getting close,” he said.
And Kyle Lundstedt, managing director of the applied analytics division at LPS, said one in three mortgage delinquencies have been in such a state for more than a year. Perhaps most alarming to Lundstedt is the rise in prime mortgage delinquencies. “The prime markets are the place we’ve seen the most increase in foreclosure,” he said.
Thanks to swm for the idea – let’s make it an ice cream social!
Plan to come this Saturday, August 7th from noon until 2pm at the La Costa Ave Park-N-Ride on the border of Encinitas – convenient for all! There will be more details posted here on Friday, but here is the link that maps the location:
The folks at voiceofsandiego.org have organized a free community event to discuss local market conditions. Headlining the panel is Rich Toscano, who has gone a long stretch without doing one of these – catch him while you can!
From moderator Scott Lewis:
All of the panelists have one thing in common: They have a deserved reputation for telling it like it is and using data and experience to expertly illustrate what’s happening. We believe that if we constantly lay out the bare facts of the economic situation, people can make the best decisions possible. And when they do that, they are able to do things like start businesses and help the rest of the community really build the kind of infrastructure needed to pull us out of this malaise.
The event is April 23rd at 6pm at Liberty Station. Click here for more info:
Most speakers at the University of San Diego’s Ninth Annual Residential Real Estate Conference: Outlook 2009 were not optimistic about the coming year, describing the current market as “extremely weak,” a “web of terror” and a “death spiral.”
While speakers touched on the issues in the residential real estate market next year throughout the conference, a panel discussion held at the end of the conference called, “Oh My Gosh, What Next? How You Can Take Advantage of the Opportunities Ahead,” primarily focused on what the market may see in 2009.
Panelists Joseph Anfuso of Florsheim Homes, Anthony Botte of Hearthstone Advisors, Jason Hall of RE/MAX Associates and Michael Schuerman of San Diego Regional Economic Development Corp. agreed that stabilization of a “rational” housing market is key to recovery. “A rational market would be great,” said Golovato. “’04 and ’05 made no sense.”
However, there was some disagreement about when recovery would occur. Alan Gin said the market might reach a bottom in the latter part of 2009 at the earliest, Anfuso and some of the other panelists said the market might not return to “normal” for some time.
“I come from the opinon that we lived in a fake economy for more than a decade,” Anfuso said. “I would just say we’re in for some trying times, not that you can’t take advantage of them … but you need to splash some cold water on your face and look what’s happening and make your business plans accordingly.”
Anfuso said creating strategic partnerships and making cuts in one’s business is key to surviving in an economy where people are trying to scramble for market share.
However, not all in attendance said the market is as bad as it seems. Lori Staehling, president of the San Diego Association of Realtors, was in the audience and voiced her opinion on the market during the question and answer session with the panel. “There are a lot of positives going on and there will be positives that come out of this for our industry,” she said. “Prices are incredible. Interest rates are incredible … and I don’t think anyone who has a fixed rate loan is going to regret it.”
The panel and Staehling agreed that building fees in the city of San Diego are too high for new building to be profitable now that prices have come down from their 2005 peaks to encourage construction.
Hall said it is a positive sign that home sales have increased over the past few months, though the market is currently seeing a seasonal slowdown.
The webinar didn’t come together fast enough, and it’s a little pricey too, so for tomorrow’s event we’re going to utilize the blog talk radio format again.
For those who would like to participate in a Q&A on today’s favorite real estate topics, call in tomorrow night between 8:30-9:30pm (the best time they had available).
The phone number is (347) 884-8498 and the Host ID is 32737.
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