QuoteAOL News:
US Housing Markets Facing Epic Hangover, Study Says
(April 18) -- The housing crash that helped bring on the worst recession since the Great Depression will linger in the nation's hardest-hit real estate markets until 2025 -- or later.
Nearly a full generation will pass before major metro areas in Arizona, California, Florida and Nevada return to the solid ground reached at the height of the housing boom in 2006-2007. And it'll take a decade or more for other urban markets in the Northeast and industrial Midwest to likewise return to peak conditions.
That's the gloomy word from financial information analyst Fiserv Case-Shiller, which released an instantly controversial study of home price trends for more than 375 U.S. markets earlier this month.
Adding insult to injury, the data-crunchers say even the start of a housing recovery in general is still a year away.
"Nationally, Fiserv Case-Shiller data points to a further 7 percent decline in home prices through the end of this year, with a prolonged recovery beginning early in 2011. In many markets, the emphasis is on the word 'prolonged,' " said David Stiff, Fiserv's chief economist.
Representing an "unprecedented market cycle" of bust to boom, the areas with the deepest price declines will face the longest recovery periods, the study indicates. Specifically:
* Orlando, Fla., won't recover its average 59.9 percent drop in home prices until 2039.
* Sacramento, Calif., will likewise jog in place until 2039 to make up its 54.8 percent home price crash.
* San Jose, Calif. -- considered the capital of Silicon Valley -- won't recover from a 41.7 percent home price plunge until 2023.
* Jacksonville, Fla.'s home price bust of 39.3 percent will keep that market below peak until 2020.
* Tucson, Ariz., also will have to wait until 2020 to rebound from a 36.8 home price plummet.
"We see several powerful forces in the market that will severely hinder the housing recoveries of many metro areas, particularly in the hard-hit states of California, Florida, Arizona and Nevada," Stiff said. "It will take these markets 15 or more years before home prices climb back to their peaks."
Fiserv attributes the housing market hangover, in part, to lingering levels of recessionary unemployment in the manufacturing sector, especially in the industrial Midwest.
The problem is also rooted in the origins of the housing market boom: easy money. In the run-up to the market meltdown, predatory lending and subprime loans flooded urban neighborhoods, causing home prices to skyrocket.
"Prices were just astoundingly high," said Robert Aldana, a real estate agent with Intero Real Estate Services in San Jose. "It was beyond reason. There was no control over appreciation. There was a complete abuse of lending guidelines.
"The higher you go, the further you fall -- I've been saying this since September," he added. "It's going to take 15 years."
But the president-elect of the Santa Clara County Association of Realtors begs to differ. "I have a hard time believe that our rebound would take as long as the study suggests," said Michael A. Sibilia, also a broker at Keller Williams Realty in Campbell, Calif.
Sibilia argues that each metro area has unique economic qualities that fly in the face of analysts' forecasts. Silicon Valley's technology industry, for example, has in the past helped rescue it from downturn and will likely do so in the future.
"Silicon Valley has been a brain trust of the world attracting the young and talented, which in turn morphs to highly successful companies," he said. "These companies also create an upward pressure for housing."
However, foreclosures shot up 72 percent in Santa Clara County last month compared with a year earlier -- the biggest increase in more than a year -- offering further proof that federal efforts to keep people in their homes have done little to turn the clock back on the local housing market.
And it's not just Silicon Valley: Federal programs have helped only a fraction of the estimated 3 million to 4 million homeowners targeted.
Mortgage data analysis company First American CoreLogic says more than 11 million homeowners are underwater on their mortgages -- that is, they owe more than their home is worth, a condition that can lead to foreclosure and depressed-value homes heading for market.
In February, for the 12th straight month, RealtyTrac reported more than 300,000 foreclosures per month.
There may be light at the end of the tunnel, however.
"The picture is not uniformly grim," Stiff said. "In fact, our analysis projects that some markets are poised for a relatively fast recovery, including some areas that never experienced large declines in prices. Markets that could see prices come back within the next few years include Pittsburgh, Pennsylvania; Columbia, South Carolina, and several metro areas in Texas, Washington and upstate New York."
http://www.aolnews.com/nation/article/us-housing-markets-facing-epic-hangover-study-says/19440151?icid=main
Anyone know if the data is for the City of Jacksonville or the MSA?
These reports are just about always for the overall market area, not just the city itself....and since there are about 375 metro areas in the U.S., this one doesn't appear to be any different.
Areas closer to the core/beach/river will recover much faster than the sprawl. This should bring development into a more compact area, I hope.
http://www.standardandpoors.com/spf/CSHomePrice_Release_033056.pdf
Perhaps we will never get back to that crazy hyper-inflated place. Looking at prices from 2003 to now, the outlook isn't nearly as bleak.
The urban neighborhoods may have depreciated with the rest of the but they still boast the highest price per sq foot on average.
The urban neighbor hoods will bounce back well before 2025. Buyers will always be attracted to areas with character and with almost no available land to build new demand will out weigh inventory in the long run.