At least there's a pulse...
At least that is what Bank of America Merrill Lynch is saying, according to this article from Housingwire.com by Jason Philyaw. BofAML is predicting lower than 2 percent GDP growth for the first half of 2011, with somewhat better number in the second half.
Michelle Meyer, a Senior U.S. economist at BofAML was quoted as saying, “it could take nearly a decade” for the housing market to recover.
The analysts see home prices falling another 5 percent in the first half of 2011 because of continuing high unemployment, a large overhang of available homes, as well as the ramifications of the robo-signing foreclosure fiasco.
BofAML is predicting that 2.3 million homes will turn into distressed sales over the next 18 months. BofAML estimates the housing supply to be about 7.2 million homes, about 21 months worth at the current pace of sales (as a contrast, CoreLogic recently estimated the housing supply to be about 6.3 million homes – nobody really knows exactly how many homes are in shadow inventory or will turn into distressed sales, which accounts for the differences in the figures).
At this point, most analysts are predicting that housing prices will fall between 5-10 percent through 2011. The massive supply of available homes and the low demand for them pretty much guarantees that this will happen, barring some kind of unforeseen turnaround in our collective economic fortunes.
It is hard for me to speculate how long it will take for the market to return to normal. I suppose it is really going to depend upon where you live. I have seen estimates that it could take until the mid-2020′s for housing to get back to 2006 levels in places like Florida, Arizona, and Nevada. At the same time, I imagine that places that did not overbuild will return to normal much faster (this is already happening to a degree in places like the Boston area). As always, you should take all these projections with a grain of salt, but all indicators suggest it will be sometime before we can take the housing market off life-support.
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