Recovery ahead, says public…but not until 2014by Peter Miller
When will the real estate downturn end? According to a new study by RealtyTrac and Trulia, most Americans surveyed believe that a market which has been in the dumps since April 2007 is likely to remain depressed until 2014. That would mean a seven-year drought on the real estate front, something truly of biblical proportions.
What makes the study interesting is that questions asked in November 2010 were asked again in April 2011. The changing perception of the marketplace is apparent–the hope for a quick resolution of the housing crisis has now evolved into a belief that we will remain firmly stuck in slow gear, despite current mortgage rates which are near historic lows.
To start, the optimists among us–5 percent of those surveyed–believe the recovery has already begun. While one hopes they’re right, the majority opinion is decidedly different.
Last November, 10 percent felt that the recovery would start in 2011, but with nearly half of 2011 already past us, that view has fallen to just 3 percent.
|When American Adults Believe Housing Market Will Recover|
|April 2011||November 2010||% Change|
|By the end of 2011||3%||10%||-70%|
|2014 or Later||54%||34%||59%|
|Source: RealtyTrac & Trulia|
“Most Americans, as our latest survey revealed, overestimated how quickly the housing market would bounce back, but when it does, it will likely be a long and gradual process,” said Pete Flint, co-founder and CEO, Trulia. “Looking at the recent double dips in home prices, I expect the rest of 2011 to be volatile for real estate. On the flip side, mortgage rates won’t stay low forever and even if home prices continue to fall for a bit, now is still a good time to enter the housing market. In my eyes, we have another 18 months until we start to see signs of price stability in the housing market.”
The betting on 2012 has also fallen. Fifteen percent of us now believe the market will turn up in 2012, down from 27 percent back in November.
What about 2013? In both surveys, 24 percent of the respondents picked 2013 as the year of recovery.
Recovery just keeps getting pushed back
Finally, we get a majority view for 2014: 54 percent of us now believe that the housing market will be back in three years, versus 34 percent last November.
“Our survey reflects a growing perception among potential homebuyers that the housing recovery is still a long way off,” said Rick Sharga, senior vice president of RealtyTrac. “Demand remains weak, loans are increasingly difficult to qualify for, and the shadow inventory of several million distressed properties is weighing down the market. All of these things need to improve before housing can recover.”
Given the conditions which impact the housing sector–and given the importance of the housing sector–it’s a wonder that we do not go back to the first-time homebuyer tax credit and encourage investors to soak up the inventory of distressed homes. These are two of the steps that will be needed to restore public confidence, along with the mortgage rates we now have and hopefully will keep.
Peter G. Miller is syndicated to more than 100 newspapers and operates the real estate news site, OurBroker.com.