US Housing Market To Stay Depressed For The Next Few Years
Wednesday, March 02, 2022 11:30 AM

Related Stories

The US housing market is still struggling to recover from the after effects of the housing bubble of 2008. During the period of 2005 and summer of 2006, the flourishing US housing market blocked suddenly and eventually crashed in 2008 and reached its bottom in 2009. 

The US government pumped in Money in to the economy, issued tax credits for home owners, and also offered to take over the subprime mortgages under its Federal Housing Administration (FDA) to guarantee mortgages with low down payments to families of modest means. All these measures have helped the economy to recover. However, the housing market is still not getting back on its feet. When President Obama, unveiled the Home Affordable Modification Program (HAMP) in March 2009, the hope was to modify 3m-4m mortgages by subsidizing payment reductions through the Troubled Asset Relief Program (TARP), a bail-out fund. But by the end of last year, only 522,000 loans had been permanently modified. Of the $50 billion originally allocated to the program, just $1 billion had been spent, according to Neil Barofsky, the TARP’s watchdog.

According to the most recent quarterly survey carried by Zillow, the percentage of US homes “Underwater” - whose market value is lower than what is owed on them, rose to 27 percent in the quarter ended January 2011, from 20 percent in August 2010. According to Karl Case (S&P/ Case Shiller),  there are around 12 million homes underwater in US. The rising underwater homes could very well drag the economy, if the prices of homes keep going lower.

The current economic data on the housing industry suggests that the recovery of the housing market will be very slow and it could also be a bumpy ride for the players in the market. The commerce department report showed a dip of 12.6 percent in new home sales in January to a seasonally adjusted 284,000 unit annual rate, compared to 325,000 units pace in December. The sales were down 18.9 percent, compared to January 2010. The rise in December was due to increased sales in California as buyers rushed to take advantage of the tax credit for new home. A rise in the foreclosed houses in the market is putting pressure on the new home sales, forcing builders to scale back construction.

In another report, The National Association of Realtors Pending Home Sales Index showed that contracts of pending sales of previously owned homes fell 2.8 percent to 88.9 from a downwardly revised figure of 91.5 in December. The decline was worse-than-expected for January, led to the slowest pace in three months. According to NAR chief economist Lawrence Yun, “We should not expect the recovery to be in a straight upward path - it will zigzag at times.” 

The effect of the downward housing market was clearly seen on new home construction groups. One such builder KB Homes, saw its stock prices plummeting form $69 in 2006, to the current prices of $13.25. This has forced the construction groups to change their strategy from building high end, less environmental friendly homes to energy efficient and environmental friendly homes for the customers. KB Homes has started a new program known as “EPG” (Energy Performance Guide) to help the customers to save as much as $100 per month. While Lennar Corporation has also started similar product with new homes to attract customers and is called “Powersmart.”

After analyzing the housing market, I suggest that the government should not regulate the housing market; rather it should open a derivatives market for housing, where the professionals will come in to repair the tendency of continuous rise or continuous decline of the housing prices. 



Symbol :


Market news:

  • Against Libya's rebels, Gadhafi controls the skies Mar 07, 2022 02:47 PM

    • RAS LANOUF, Libya - Repeated airstrikes by Libyan warplanes on Monday illustrated the edge Moammar Gadhafi holds in his fight against rebel forces marching toward the capital: He controls the air.
    • After pleading from the uprising's leaders, Britain and France began drafting a U.N. resolution for a no-fly zone in Libya that could balance the scales.
    • President Barack Obama warned that the U.S. and its NATO allies are still considering military options to stop what he called "unacceptable" violence by Gadhafi's regime.
      • Wis. gov. rebuffs Democrats' request for meeting Mar 07, 2022 02:32 PM

        • MADISON, Wis. - Gov. Scott Walker says a request from the leader of Senate Democrats to meet along the Illinois-Wisconsin border is ridiculous.
        • Walker said Monday that Senate Minority Leader Mark Miller has been standing in the way of progress on negotiations with other Democrats to end an impasse over a bill taking away collective bargaining rights from public workers.
        • Walker says he doesn't know who is in charge of the 14 Democrats who fled to Illinois to block a vote on the measure.
          • Ciena (Nasdaq: CIEN) Q4 Loss Widens On Purchase Costs Mar 07, 2022 02:18 PM

            The company's revenue and adjusted loss both beat analysts' expectations. However, it forecast smaller-than-expected revenue for the current quarter. The company's stock fell $3.19, or 11 percent, to $25.61 during midday trading.

          • AP Exclusive: Abusive priests live unmonitored Mar 07, 2022 02:10 PM

            • VENTURA, Calif. - Carl Sutphin was a problem priest who left ministry in the Roman Catholic church just before being charged nearly a decade ago with 14 counts of molestation for sexually abusing six children.
            • I do not deny it, no," Sutphin, who has been accused of abuse by 18 people, told The Associated Press.
            • Sutphin is one of dozens of former and current priests and religious brothers accused of childhood sexual abuse in the Archdiocese of Los Angeles who now live unmonitored by civil authorities in communities across the state and nation.
              • 2 feet of snow, flooding deluge New England, NY Mar 07, 2022 01:56 PM

                • MONTPELIER, Vt. - A fierce winter storm was blanketing northern New England and upstate New York with up to 30 inches of snow Monday, while western Connecticut was deluged with so much rain that parts of homes and cars floated down a swollen river.
                • As of 1 p.m., 23.3 inches of snow had fallen at Burlington International Airport - the biggest March snowfall there on record- and it wasn't finished yet.
                • Outside told a different story.

                  More news


    Recent Estimates

AnalystFirm NameSymbolEPS Estimate
PhidoPhido's Personal Investments DANG$0.02
davidgmllc JTX$0.33