Housing markets are forecast to experience sluggish home sales during the first half of 2011, followed by an improvement in sales during the spring time with better home values developing in many regions of the U.S., according to the new Housing Predictor national forecast for the year.
Markets will show improvements from their downturn in many regions with average housing deflation forecast at just 3.9% nationally. The figure represents the lowest home deflation on an annual basis in five years. Many areas in the mid-west and north-eastern corridor should see markets with appreciation, surprising homeowners.
Especially hard hit areas of the west and south, however, are expected to undergo extended periods of deflation in most markets as the regions work through an over-supply of properties and abnormally high levels of short sales and foreclosures.
Unemployment topping 14% in some areas of the nation coupled with sluggish business conditions in many sectors, including retail, lumber, construction and tourism are pressuring the economy. The broader measure of under-employment topping 20% in some areas is also hampering a recovery in the housing market.
Record foreclosures and more than one in four homeowners underwater on their mortgages is also slowing progress as mortgage holders, unable to refinance their homes walk away from mortgages at record levels. A lack of good government programs aimed at reducing foreclosures are projected to trouble markets with rising foreclosures and short sales in 2011.
However, mortgage companies, banks and loan servicing companies not associated with government initiated programs are projected to aid the housing market, and move many areas of the country into the beginning stages of recovery during the year working with homeowners to modify mortgages in greater numbers.
A tight mortgage market will contribute to slower sales in markets that experienced double-digit appreciation during the boom, including areas in California, Florida, Arizona and Nevada, where foreclosures are highest. As projected last year by Housing Predictor, markets will continue to drag towards improving stabilization for an extended period without a healthy mortgage market.
However, signs of a recovery in housing are showing progress with improving sales being reported due to near record low mortgage rates and lower home prices. Improving conditions are projected to develop at a slow pace.