From the NY Post:
With the spring selling season about to hit, homeowners looking to sell and pocket a huge profit are hoping the real estate funk ends quickly.
But, experts say, don’t count on it.
“It’ll probably be 2008 before the housing market bottoms,” says Mark Grinis, a partner in Ernst & Young’s Real Estate, Hospitality & Construction group.
That’s because there are a higher number of unsold homes – both new and existing – on the market then we’ve seen in a while. “And that excess inventory will force sellers to lower their prices,” notes Zoltan Pozsar, an economist at Economy.com.
So don’t be fooled by the recent news that sales of existing homes unexpectedly rose 5.2 percent in February, according to the National Association of Realtors, breaking a five-month losing streak.
It’s not enough.
…
One fly in the ointment is the trouble pulsing through the sub-prime market. That’s the sector of the mortgage industry that gives loans to folks with little or no credit. So folks with “sub-prime” credit were given cheap loans on properties they couldn’t afford.
…
The bigger problem is that if more people default on their mortgages and are forced into foreclosure, other sectors of the economy will be affected. If people aren’t buying homes, then they’re not buying washers and dryers, using interior decorators or hiring handymen to fix faucets either.“The housing market has been a major contributor to the broader economy as home prices have increased. The inverse will also hold true,” reminds Grinis.
NAR hasn’t released its existing home sale report for February yet.
Perhaps there aren’t any ways for them to spin it as being good, so they’re just going to skip it.
“Alt-A – The main website for the subprime story, mortgageimplode.com, now says that the problem is starting to move to the next level of mortgages, Alt-A (or Alt-B as it describes them).
If you recall we said last week that sub prime was 15 – 20% of outstanding mortgages and that Alt-A was the same again. Alt-A is basically beetween subprime and prime, but the problem is about 80% of them have been written with very little documentation. It now appears that these are starting to move the same way as sub prime. As Fed governor Susan Bies warned, the losses in the subprime area are just the start of the wave.
Alt-A now appears to be the next part of the wave.”