Delay of the U.S. housing recovery

“We have to be aware that the stabilization that we've seen so far is tenuous at best,” Lennar Corp. Chief Executive Stuart A. Miller said Nov. 17 at a conference in New York sponsored by UBS AG.

Homebuilders and investors will get a better gauge of whether housing demand is stabilizing in 2010's first quarter, said Robert Toll, chairman and chief executive officer of Toll Brothers, the largest builder of luxury houses.

The spring selling season for homebuilders typically begins in February, earlier than the resale market because families with children want to be able to move into a home before September's start of school. It can take up to six months to build a home, and up to 9 months to build the larger houses sold by Toll Brothers.

Spring Recovery

“My prediction is we'll probably recover on a seasonal basis,” Toll said yesterday at a conference in New York sponsored by Citigroup Inc. “It's generally accepted that the homebuilding industry is off the mat and on the road to recovery.”

The U.S. median existing home price tumbled 28 percent over three years to US$164,800 in January, the lowest in more than seven years, according to the National Association of Realtors. A month later, Congress passed the American Recovery and Reinvestment Act of 2009 giving a tax credit to first-time buyers.

Existing home prices probably will fall 12 percent this year to a median of US$173,800, while the new-home median likely will tumble 8.7 percent to US$212,000, according to a forecast on Fannie Mae's Web site. Combined sales of new and existing properties probably will drop 0.7 percent to 5.36 million, even with the federal tax credit, after plunging 16 percent last year.

Bouncing at the Bottom

Josh Levin, a housing analyst at Citigroup Global Markets Inc. in New York, said he expects sales to continue to be slow until January or early February, followed by a surge as buyers try to beat the April 30 expiration of the tax credit.

“The bouncing along the bottom is distorted by government policies,” he said in an interview yesterday.

Foreclosures will also have limited impact on driving down real estate prices as long as banks are slow to put properties on the market and the government encourages loan modification programs, he said.

“It's clear the government and banks don't want to flood the market with foreclosed homes and it's clear it's going to be dragged out,” he said.

1|2

SharePrintEmail

Write a Comment

Terms

Enter your comments - 3000 characters max

Type in image code

Submit

 Receive China Post promos
 Respond to this email