After laying off for awhile to see what Obama had to offer in the way of bailouts for homeowners, the major lenders have concluded, “nothing” and started in again foreclosing homes. Fannie Mae, Wells Fargo and Chase have all resumed pushing foreclosures through the pipeline. Which will reduce prices but start restoring some sanity to the market.
Ronald Temple, co-director of research at Lazard Asset Management, expects home prices to fall 22% to 27% from their January levels. More than 2.1 million homes will be lost this year because borrowers can’t meet their loan payments, up from about 1.7 million in 2008, according to Moody’s Economy.com.
I won’t be at all surprised to see Mr. Temple join me in the principal’s office tomorrow morning. What a pessimist!
UPDATE: Sheesh, here’s another spoilsport!
New York Area Home Prices to Fall 15%, Rosen Says By Dan Levy
April 14 (Bloomberg) — Home prices in the New York City metropolitan area will fall as much as 15 percent as Wall Street firms cut jobs and slash bonuses, according to Kenneth Rosen, an economist at the University of California, Berkeley.
Luxury vacation markets such as the Hamptons on the east end of Long Island, New York; Lake Tahoe in California; and Aspen, Colorado will also suffer as the recession deepens, said Rosen, chairman of the Fisher Center for Real Estate and Urban Economics. Prices may fall 20 percent in those areas.
“These declines are happening but aren’t showing up in the data yet,” Rosen said in an interview. “Any place hit by the financial crisis will have substantial declines.”
The S&P/Case-Shiller index of prices in 20 U.S. cities fell 19 percent in January from a year earlier, the biggest drop on record. New foreclosures, a glut of unsold homes and eroding household wealth are driving down prices amid the worst housing crisis since the 1930s. The U.S. economy shed 663,000 jobs last month and the unemployment rate rose to a 25-year high of 8.5 percent, according to the Labor Department.
In New York City, apartment prices fell 19 percent in the first quarter from a year earlier to an average $805,000, the Real Estate Board of New York said last week.
City Comptroller William Thompson predicted in March that 250,000 jobs would be lost in the five boroughs before the recession ends. New York City’s unemployment rate rose to 8.1 percent in February from 6.9 percent in January, a record month- to-month increase, according to the state Labor Department.
Across the U.S., Rosen predicted house prices will fall another 7 percent, with parts of California, Florida, Nevada and Arizona posting additional declines of as much as 15 percent as those states absorb record foreclosures.
The housing market’s cumulative price drop from peak to trough will be 25 percent with, a “bottoming” period that begins this year and may last two years, Rosen said.
“Job losses are large and the foreclosure inventory is rising,” said Rosen, who also runs Rosen Real Estate Securities LLC in Berkeley, a hedge fund with about $300 million in assets. “It’s going to get worse before it gets better, even with the best government efforts.”