An article in MarketWatch has just reported the cold, hard facts I’ve been sharing for the past few months; it will take years for home prices to return. Reporting on a study done by HSH Associates, a financial publishing house, the article addresses the 32.6% drop in home prices as reported by Case-Shiller. And using those numbers the study creates a fictional scenario for a home purchased at the housing peak, with the price not recovering until mid 2022.
The article also presents some facts and analysis from First American CoreLogic that shows a more rapid recovery for the typical homeowner, but even according to their numbers, many underwater borrowers will not see their equity return for at least 5 to 10 years.
While the projections reported are based upon several “assumptions”—you can’t project if you don’t assume—the appreciation shown may be roughly equivalent to the rate of inflation. And what that means for homeowners is that the price of their home may rebound to its previous high; but the value of those dollars will have shrunk by a corresponding percentage, representing only a “feel good” recovery.
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