Monday, November 15, 2010

Real estate market in USA is facing headwinds---Shan Saeed

I have been sharing my analysis with my friends and assocaites..Where is the Housing Market of US heading towards? Down-hill....

More bad news for the housing market is coming up. The housing figures released their third quarter report and it largely echos: Double dip or somersault is coming. Home values fell an average -4.3% in the third quarter. This is quite ominous. The housing market decline is likely to surpass the Great Depression’s decline and that prices are unlikely to recover before next fall i.e. 2011.

It is widely expected that the unceasing declines in home values signal that we’re in for a long, bleak winter of continued troubles for the housing market. The length and depth of the current housing recession is rivaling the Great Depression’s real estate downturn, and, with encouraging signs fading, will easily eclipse it in the coming months. Fire sale is going to get HOT....

The number of foreclosures reached a new all-time high and that the number of homeowners under the bridge on their loan has now reached 2% – a high this year. Depressing..Valutations are down by 57% since the start of this financial meltdown.

The high percentage of homeowners in negative equity continues to be troubling, in that it represents a huge number of people who are not only more vulnerable to foreclosure, but who are essentially trapped in their current homes and are prevented from selling and buying a new home. This has profound implications for future demand and will be a millstone around the neck of the housing market. Consumers are uncertain with deleveraging taking its hold.

Housing market is playing out almost exactly as I predicted last summer. This is pure demand-supply dynamics at work. The overhang of inventory is crushing meager demand and the mortgage mess isn’t helping matters as shadow inventory is pushed further into the future. Housing market was the domino that set the credit crisis in motion in 2007 and it could pose a very serious risk in 2011.

Disclaimer: This is just a research piece and not an investment advice..Investors are encouraged to execute their own DD and investment strategy analysis.

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