Consumer Poll: Housing Crisis Could Continue To 2020
MINNEAPOLIS (WCCO) – As if there wasn’t enough bad economic news, some bankers are predicting the housing crisis could last until 2020.
The pessimistic outlook comes from a study the FICO company, which tried to predict consumer behavior, recently released.
The FICO poll looked at mortgage defaults, mortgage delinquencies and other consumer credit behavior, and the data show a long, slow recovery will continue.
That news is not what sellers want to hear.
Lori Thomas is trying to sell her Oakdale home, which she bought it a decade ago, thinking she was buying for life.
“If the market is going to stay the way it is, and we can’t sell it,” Thomas said. “We’ll start getting more and more nervous.”
She had planned on staying in the house for many years. But after getting married four years ago, her plans changed.
She and her husband, Kevin, put off selling then when the housing market declined, only to face a bigger challenge now with current market conditions. Kevin owns a home, too.
In fact bankers are betting homeowners like the Thomas’ will continue hurting. Their home has been on the market for four months.
Bankers surveyed believe there is more doom and gloom ahead for the housing market. Seventy-three percent believe mortgage defaults will remain elevated for at least five more years.
That survey also included bankers’ thoughts on credit cards, auto loans and student loans, and, on each one, they expect delinquencies to only rise.
Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO Labs, said, “Housing has been an enormous drag on the economy for over three years as U.S. households lost trillions of dollars in equity. While the housing sector will almost certainly gain strength during the next nine years, many bankers clearly believe prices will remain depressed for half a generation. This puts the devastation of the housing crash into perspective.”
On the other hand, some think that the housing mess with clear up sooner than later. Chris Galler, the CEO of the Minnesota Association of Realtors, denounces the doom and gloom forecast.
“When you’re trying to make a prediction a decade out, it’s very difficult to do,” he said.
He thinks record-low interest rates coupled with affordable homes will be appealing to buyers.
“Our anticipation is 2014, 2015, housing marketplace will be on solid ground,” he said. “So we think there will be a rebound in housing.”
Galler’s analysis is exactly what the Thomas’ want to hear.
They’ve lowered the price twice and upgraded the siding, windows and more. Their house is a home, and they just hope someone else feels the same soon.
If interested in Lori Thomas’ home, contact Dinah Urban with Remax Realty at 952-431-2400. It’s located in Oakdale, just west of Interstate 694 and north of Interstate 94.