November 9th, 2010 11:26 PM by Lehel S.
Remember the 2010 housing recovery? The Oracle of Omaha said that by the end of this year things would get better. He wasn’t the only one. Fitch also promised us stability in late 2010. Well, as the foreclosure mess spirals us toward Dec. 31, the chances for a happy housing new year seem pretty remote.
On Tuesday, the nation’s mortgage bankers released a report saying that they expect the housing market to continue limping along into next year. Things could pick up, they say, in 2012. (That’s, what, five or so years of the housing bust…but who’s counting?)
“Economic growth in 2010 has been subdued and this trend will likely continue for most of 2011. Households remain cautious given the weak job market,” says Jay Brinkmann, the Mortgage Bankers Association’s chief economist, in a forecast.
More pain-yes, more-is expected before recovery arrives.
Take unemployment. The rate, the trade group says, will increase from the current 9.6% to 9.9% by the first quarter of 2011. But it could slip back to 8.7% by the end of 2012. Mortgage delinquency and foreclosure rates should track the downward trend in the unemployment rate, the group says.
Meanwhile, home shoppers looking to tap current record-low rates might want to act quickly: Fixed rates will average about 4.4% in the fourth quarter, but, that they could climb to 5.1% by the end of 2011 and then edge closer to 6% in 2012.
There’s a bit of good news for home sales down the road. This year’s existing-home deals will fall by 8% from a year earlier, with a modest rebound next year, the MBA predicts. Pent up demand, however, could boost deals by a headline-grabbing 16% in 2012.
The outlook is even brighter for the battered home builders. The MBA estimates that new home sales, which have fallen to anemic levels in recent months, bottomed in the third quarter of 2010. They’ll begin a slow recovery in 2011, increasing around 20% from a low base, and then jump 40% in 2012 as markets recover.
Readers, what do you see in your crystal ball?