Is There Any Hope For Housing?

Recent hopeful signs in the housing market have taken a back seat to headlines over foreclosure robo-signers. With major mortgage servicers suspending foreclosures, at least temporarily, hopes for a sustained housing recover have begun to fade.

Add to that a still weak economy with stubbornly high unemployment, more strict mortgage requirements and soft prices, and more housing analysts are beginning to doubt that a recovery is at hand.

Fiserv, a market analytics company, recently revised its 2011 housing forecast, calling for a more than seven percent decline in home prices. That's on top of more than 50 percent declines in some of the harder hit markets.

But that forecast appears to be among the more bearish. While an alarmingly high number of homeowners are delinquent in their payments, raising the specter of still-rising foreclosures, many analysts think the housing market may be at, or near the bottom.

Four percent increase

Economist Joel Naroff, of Naroff Economic Advisors in Holland, Pa., who was among the early predictors of the housing market implosion, is calling for home prices to rise by an average of four percent in 2011. He's also looking for an uptick in new housing construction.

"On a percentage basis the starts gain could be quite strong, 15 percent, but that is only because there is no construction currently going on," Naroff told ConsumerAffairs.com. "That is, a change from a very low level creates large percentage changes even if the absolute number of additional starts is not great."

Even real estate agents will admit that the current housing market remains very weak. Even though existing home sales saw a ten percent rise from August to September, the increase is measured against extremely anemic result. As a more realistic comparison, September's sales are still down nearly 20 percent from the levels of one year ago. But the industry still sees reason for hope.

Choppy recovery

"A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium," said Lawrence Yun, chief economist for the National Association of Realtors. "But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions."

As in politics, all real estate - especially when it comes to value - is local. The most recent S&P Case-Shiller Home Price Index shows a slight increase in both the 10-City and 20-City Composite Home Prices indices, when measured against 2009.

At the same time, however, 12 of the 20 Metropolitan Statistical Areas posted negative annual growth rates. This is two more than what was reported in July, as Detroit and Miami posted negative annual rates in August. While still negative, three of the 20 MSAs saw improvement in year-over-year growth rates in August as compared to July.

They are Charlotte, Cleveland and Las Vegas with annual growth rates of -3.4 percent, -0.4 percent and -4.5 percent, respectively. Annual growth rates slowed down in the three California cities, with Los Angeles, San Diego and San Francisco posting annual gains of +5.4 percent, +6.9 percent and +7.8 percent, respectively - a significant drop from July.