Don’t Expect A Housing Market Recovery Until 2014 – Forbes

Don’t Expect A Housing Market Recovery Until 2014 – Forbes.

I think this author is a tad optimistic.  The author makes an unsupported underlying assumption, that the job market will have improved rather than degenerated between now and 2014, with no evidence that the jobs market is recovering in fact quite the contrary.  A dismal housing market is only the symptom of the economic disease, not the actual disease.  If unemployment is still hovering near historic levels and remains stubbornly persistent…where are all the buyers of these homes going to come from?  China?

It’s difficult to see a 2014 recovery in the housing market when the FED is holding interest rates at historic lows, Fannie and Freddie government loan guarantees continue, and a massive backlog of bank foreclosures remains in the pipeline.  With all of this effort to prop up the housing market,  how can we expect to see market clearing prices in housing to materialize?  It won’t until all of these market interventions are abandoned and housing prices are allowed drop substantially.  Only after the market is allowed to bottom,  can any hope for a recovery in housing exist.

 

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