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.

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  • Bill

    Think I’ll move to Australia!

  • MIke

    How long did the last Republican caused depression last?
    The only solution to turning this economy around is creating jobs and raising wages. Demand creates jobs. Austerity forces behavior that opposes spending. Catch 22. Reduced demand, less work, less recovery.

    • Scott Alan

      The government cannot create jobs, only temporary work. The government is not here to help us. Fannie and Freddie are and were a really bad idea. Government is the reason most businesses are not expanding. Government spending has skyrocketed under Bush and is now increasing faster than ever in history. Justice is the enemy of equality. After the coming economic collapse, government spending will be slashed to where it should be and we can continue to outpace the world after the nanny state is destroyed. About half of working America pays NO income tax. Zero. The party is over.

    • Freddie

      yes, it’s all the Republicans fault. I believe this article is about the house market, not the recession. It’s the lenders fault for approving crazy loans and it’s the buyers fault for buying house that they obviously couldn’t afford. Everyone’s all about their image and the bigger the house, the higher they look in this culture.
      Buy a clue Mike.

      • Factpointer

        Wow Freddie, the second half of your sentence is absolutly correct, but wow if you can’t see the connection between the housing market and the recession then you should have a caretaker, the housing crash is over half of the reason for the recession.

  • GoodLuckAll

    As i’ve been saying for years the housing market will never recover to where it was people were buying 250k homes that should have been 125k, everything was overbuilt, the jobs outlook bleakens daily, and the population that lives off welfare grows daily also, if they think it will turnaround please explain to me who will buy all these homes, sadly I paid 125k last year for a house needing no work in the suburbs which is where I wanted to live because I prefer to live near human beings, which seems like a steal but you can buy a house for 100k that needs no work now. I pay $900 a month for my house payment, I was paying $1250 to rent an apartment, because every1 knows few can qualify anymore for a home loan, further proving my point of a recovery that will never happen.

  • Oh-Really?

    Well it took about 12 – 15 solid years of greed to get us into this mess.. Its safe to say it will take us just as long or longer to get out. Who do I blame.. I blame every one that took part.. I blame the guy that purchased a house he knew he couldn’t afford and I blame the guy you gave him that loan. Here is the thing boys and girls, the people with the power and the money are getting smarter, more powerful every day. As for the rest, they are getting dumber every day.. What happens when you take those powerful folks and put them up against every one else..

    • Jacque

      Don’t worry, Obama will come up with some trillion dollar package to make it easier again for people to get home loans before his 4 years is up and he’s finally out of the office.

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