Housing In '09: Much Like '08

The Early Show: Expert Says Market Not Likely To Bottom Until Late Next Year. And Recovery Should Be Slow

(CBS)  It's been a tumultuous year in the U.S. housing market, to say the least, with foreclosures reaching record highs, and interest rates at record lows.

At the moment, a full 45 percent of existing homes being sold had been foreclosed on.

Will 2009 bring relief for a beleaguered housing market?

On The Early Show Saturday Edition, financial contributor Vera Gibbons said, don't count on it.
"The market is widely expected to bottom sometime in late 2009," she told co-anchor Erica Hill, "but the recovery is going to be slow, going to be gradual, given the rising unemployment that we’re seeing.
"Right now, we have a lot of homes on the market. We’ve got over an 11-month supply. A normal market would have closer to six months. You’ve got to wipe out some of that inventory before we see any kind of stability."
Some economists are saying things could stabilize in 2009 but, "I say, brace yourself for rough year, and expect some light at the end of the tunnel by 2010."

There are more than 4 million mortgages that may be prone to foreclosures, according to the Federal Deposit Insurance Corporation. Those are mortgages that are due to reset to higher payments over the next couple of years. Even with optimal governmental and lender intervention, Gibbons says, we should expect another 3 million foreclosures nationwide as unemployment rises. These days, not just about risky loans; it's also about mounting layoffs."

And the price outlook isn't any better, either.

Nationwide, home prices have fallen over 20 percent from their 2006 peaks, Gibbons points out, and the skid isn't over. Some analysts are projecting an additional 10-to-15 percent decline, and others, including one who accurately predicted the housing slide, expects another 20 percent decline in 2009.

All this despite rates on 30-year mortgages being at 45-year lows, with some qualified buyers locking in rates of 4.5 percent.

If you're a first-time buyer, have excellent credit, and can make sizable down payment, you're really in the driver's seat.

In addition, the low rates mean now may be a good time to refinance.

There's been a flurry of activity in the refinance market in recent weeks. If you qualify (you don't owe more on the mortgage than the home is worth, you have some equity in the home -- at least 10 percent), and you plan to stay in the house awhile, this would be a great time to refinance.

But sellers should wait if at all possible, Gibbons advises. The market has yet to stabilize and with we're still not at the point where you will be getting your money's worth. If you're able to pay your mortgage on time- stay put!

If you must sell your home, you've got to price it to sell, maybe even a little bit below market, five percent below market. Homes that are priced appropriately sell faster and at a better price than those that are priced too high.

[jikan-2009]

No way! Next year should be worse than 2008 and housing prices should slip at least 25% more. But I suspect that the botton won''t be reached until sometime 2011 or 2012 where it should stay flat for 5 years. Good chance housing prices will not see the highs of 2006 for another 20 years.
Since next year should see the colapse of the commercial housing market, rents should start to slide, making house expensive relative to rent. I don''t see how to stop this downward spiral without artifically set housing prices 30% or more lower and reset the mortgages. Unlikely, so I would expect a bigger decline. Just look at history.

[jackobyte]

Housing prices must fall. So that no one need be burdened by undue debt and indebted to potentates of finance.

The value of a house is not its bricks and mortar or the land it sits on but the people who live therein.

[debinok1]

The housing market will follow the job market very closely, within a few months of lay offs more foreclosures will follow. Most people do not have enough saved to support more than a month or 2 without an income. Until we see jobs coming back into the economy, we will continue to see foreclosures.

[sambornstein]

On December 14, 2008, CBS%u2019s 60 Minutes had a segment on the 2nd Wave of Foreclosures. They indicated that experts were expecting another wave of mortgage defaults on ALT-A and Option ARMs mortgages which will dwarf the Subprime Mortgage Crisis.
Many fail to realize that there are millions of self-employed smaller businesses, who employ from 1-10 employees, that are holding the mortgages that are going to reset in 2009 through 2012. These borrowers are Prime and Near-Prime borrowers who hold ALT-A, Option ARMs, Interest-Only mortgages. There are $1 Trillion ALT-As, and $500-600 Billion Option ARMs.
So, here we have a major problem%u2026 Not only will these small business owners lose their homes, but there will be the resulting JOB LOSSES on their business failure. %u201CJOB RETENTION IS AS IMPORTANT AS JOB CREATION%u201D.
The NASE survey is at http://www.nase.org . See the NASE News for the Survey on Toxic Mortgages.
According to this survey, it is estimated that 3,709,800 small business owners hold Alt-A and other toxic mortgages, and 1,279,800 are already delinquent as they have missed one to three or more monthly mortgage payments at mid-November, before the expected Resets that are scheduled to begin in 4th Quarter 2008 through 2012.

Congress should take note of this survey and be %u201Cproactive%u201D in addressing the situation, rather than %u201Creactive%u201D as the case has been in the Subprime Mortgage Crisis.

[frankistage]

So the rape of the middle class will continue into 2009. Wonder at what point in the spring/summer oil companies will fabricate more lies to try and jack gas back above $3/gal. But the oil men will be out of the White House so maybe we''ll have a good chance of keeping it below $2.50/gal.