A full housing recovery is three to four years off as the nation grapples with a shadow housing inventory of 4.5 million distressed properties, according to Michael Fratantoni, vice president of research and economics for the Mortgage Bankers Association.
Fratantoni said a phenomenon is now surfacing in housing that is essentially a “tale of two cities” where home prices are beginning to stabilize in economically viable parts of the country, while other areas are paralyzed by high unemployment and large shadow inventories.
“We are going to see different housing market recoveries,” Fratantoni said during the state of the industry address at the MBA’s secondary mortgage market conference in New York.
“You will find new homebuilding stronger in markets in Texas and around Washington D.C.,” he said.
Meanwhile, the shadow inventory that is driving down prices in parts of the U.S. is stalling an overall national recovery even though most of the distressed inventory is concentrated in Florida, California, Illinois, New York and New Jersey, according to Fratantoni’s research.
“This year, you will see some markets show gains in housing prices, while other markets will continue to have elevated levels of inventory,” he said.