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Mark Zandi's Forecast of Housing Prices In 2010
Dec 9th, 2009
Towards the end of 2009, we
were starting to see a glimmer of light at the end of the tunnel as home sales
increased registering its highest levels in more than 2 years. Many thought
that we have reached the bottom in home prices with increased interest from
home buyers stirring up bidding wars from
Not to ruin the party but
Mark Zandi, the chief economist of Economy.com thinks
not. He predicts that home prices may fall another 5% to 10% in 2010 with some extreme
cases of 30% in places like
Zandi worries that the millions of troubled loans that
eventually don’t get modified will pile up and convert into more foreclosures. RealtyTrac estimates that 2 million housing units in the
Zandi is estimating 2.4 million new foreclosures in 2010.
He is anticipating that banks will become more aggressive in listing more of
their properties in the first half of the year. The bank’s actions of dumping
more properties in the market will cause prices to tumble even more.
Currently, the property
market is not able to stand on its own as it is artificially propped up by the
extended first-time-home-buyer tax credit coupled with the government’s
expensive purchases of mortgage backed securities (MBS).
The U.S government has been
purchasing mortgage-backed-securities or the bundling of home loans as of late
2008. The government purchases of these securities have helped to keep mortgage
rates low and attractive. Mortgage-backed securities were once popularly sold
through Wall Street to world-wide investors betting that
There is speculation that the
government may end its purchases of mortgage-backed-securities by March 2010.
This may result in mortgage rates to spike by a full point. This may turn away
many homebuyers as it raises the cost of buying a home.
All these factors were
incorporated into Economy.com’s housing price forecast
for 2010 with the consideration of local figures for income, population,
interest rates and foreclosures.
The result covers 100
metropolitan areas. Their 2009 projection of a 14.5% decline were quite
accurate and not too far off from the actual 13.2%
According to Zandi, the hardest hit areas as he terms the ‘usual
suspects’ such as Nevada, Florida, Arizona and California will experience more
foreclosures. He indicated
Zandi points out to the less controversial areas such as the
Pacific Northwest,
The brighter spots are found
in the pockets of the Midwest where the agricultural and energy economies are
stronger in places like Dakota,
Comments
News Archive
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41 Suspects Arrested For Mortgage Fraud - October 15th 2009
Bridge Loans Coming Soon For Unemployed Homeowners - October 14th 2009
Government Modification Program Inadequate And Calls For An Upgrade - October 9th 2009
Freddie Mac Offers Door To Door Help On Your Modification - September 29th 2009
Federal Housing Administration (FHA) Running Out Of Money - September 18th 2009
Good Time To Refinance With Government Program - September 15th 2009
Selling Your Home And Tips For The First Time Homebuyer - September 14th 2009
How To Keep Your Home If You Lose Your Job - August 28th 2009
Citigroup Performing Well In Foreclosure Prevention - August 25th 2009
Foreclosure Rescue Scams Preying On Homeowners - August 17th 2009
Deutsche Bank Estimates 48% of U.S Homeowners Underwater By 2011 - August 11th 2009
Loan Modification Progress Report Card - August 5th 2009
How Bad Are Foreclosures In Your City? - July 30th 2009
Rep. Barney Frank Threatens Banks To Stop Foreclosure Or Else? - July 28th 2009
U.S Government Wants 500,000 Trial Modifications By Nov 1st - July 28th 2009
Subprime Brokers Involved In Loan Modification Scam - July 21st 2009
'Walk-Away' Survey Shows 26% of Defaults Are Intentional - July 21st 2009
'Own-To-Rent' The New Emerging Mortgage Plan - July 17th 2009
Tools To Help Homeowners Save Big In Property Taxes - July 16th 2009
Lawmakers Dissapointed With Foreclosure Help Programs - July 16th 2009
New Jersey Attorney General Goes After Mortgage Scams - July 15th 2009
Watch Out For Some Misleading Reverse Mortgage Advertisements - July 6th 2009
Chase And Bank of America To Experience 2nd Wave of Foreclosures - July 6th 2009
Obama Extends Mortgage Refinancing Program, Raising New Limit To 125% - July 1st 2009
Paper Avalanche, Lack of Trained Staff Add Obstacles To Loan Modification Program - June 29th 2009
Government Loan Modification And Refinance Program Shows Substantial Progress - June 18th 2009
Luring First Time Homebuyers, Tips To Beat The Competition And Sell Your Home - June 15th 2009
Bank Of America has modified 50,000 loans in Countrywide settlement - May 26th 2009
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