Despite recovery, national housing sector still a long way from normal

  • Article by: Kevin G. Hall , McClatchy News Service
  • Updated: February 9, 2013 - 10:14 PM

Sector no longer weighs down the economy, but one economist cautions there are “clearing skies, not blue skies.”

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e72521Feb. 8, 13 7:24 AM

This housing market still has a major cloud hanging over it -- interest rates --. Rates are being held artificially low right now, in fact interest rates are lower than inflation which is unsustainable in the long-term, or even the intermediate-term. The longer this goes on the rougher will be the consequences. For housing in particular this is a major concern, when rates are finally allowed to regress to thier natural level this is going to have a very dramatic impact on real estate of all types (as well as the broader economy). FYI - a 1 percent increase in a 30 mortgage translates into about a 10 percent decline in market value. And rates could go up 3, 5, maybe 6 or 7 percent from where they are now, it all depends. This current dynamic we're seeing in housing may be deceptive and possible a type of sucker rally. Be wise and stay away form long-term loan commitments for now. We could see another 20 to 30 percent decline in home valuations over the next few years (relative to median household incomes adjusted to inflation, which is likely to accelerate).

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e72521Feb. 8, 13 7:43 AM

This housing market still has a major cloud hanging over it -- interest rates --. Rates are currently being held artificially low, in fact interest rates are lower than inflation which is unsustainable in the long-term, or even the intermediate-term. The longer this goes on the rougher will be the consequences. For housing in particular this is a major concern, when rates are finally allowed to regress to their natural level the impact will be very dramatic on real estate of all types (as well as the broader economy). FYI - a 1 percent increase in a 30 mortgage translates into about a 10 percent decline in market value. And rates could go up 3, 5, maybe 6 or 7 percent from where they are now, it all depends. This current dynamic we're seeing in housing may be deceptive and possibly a type of sucker rally. Be wise and stay away form long-term loan commitments for now. We could see another 20 to 30 percent decline in home valuations over the next few years (relative to median household incomes adjusted to inflation, which is likely to accelerate).

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gemie1Feb. 8, 13 8:22 AM

e72521, well said!

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theagonybhoFeb. 8, 13 3:33 PM

Isnt it funny how after the election all the real data is coming out, housing not good, 4th quarter we restracted unemployment rising, fewer jobs being created.

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