>Region’s home values have further to fall: analyst Saturday, December 19, 2009
BY KATHLEEN LYNN
The Record
STAFF WRITER
https://www.northjersey.com/news/79705747.html#
Despite recent hints that home values may have bottomed out, a Deutsche Bank Securities analyst Friday forecast another drop in the region’s prices — possibly as much as 29 percent.
Deutsche Bank analyst Karen Weaver said the drop is likely because housing in the New York metropolitan area, including Bergen, Passaic and Hudson counties, is still too expensive for many buyers.
“Affordability is the driving force behind the outlook here,” the report said.
Prices “would need to decline another 29 percent just to restore prices to the point in New York’s history when housing was at its most affordable,” the report said. That was in 1998, after a decadelong slump in housing. Weaver used the most affordable point as a benchmark because typically in housing recessions, prices drop to maximum affordability levels.
If, on the other hand, prices simply return to average levels of affordability over the past two decades, prices in this region would fall another 8 percent, Weaver said.
Nationwide, she expects prices to decline another 10 percent to 12 percent.
Weaver’s analysis is aimed at those who invest in pools of mortgages. She cautioned that her forecast is not precise enough to allow home buyers to accurately predict price changes in individual towns or housing markets. That’s largely because the forecast covers a large area, consisting of Putnam, Westchester and Rockland counties, as well as the five boroughs of New York and North Jersey’s Bergen, Passaic and Hudson counties.
The Deutsche Bank report expects greater price drops than many other analysts have predicted.
“There are no ‘forecastable’ factors to support rising home prices,” Weaver wrote. “Would-be homebuyers’ wings are still clipped by high unemployment and tight credit.” In addition, the report said, many homeowners can’t move up because they owe more on their mortgages than their property is worth.
Many other economists predict flat or slightly declining prices in 2010.
Another report released Friday, from IHS Global Insight, said the New York metropolitan area is actually undervalued by about 7 percent. IHS Global Insight considers, among other factors, mortgage rates and the premiums or discounts that buyers have typically expected in an area. The New York metro area tends to be one of the nation’s priciest housing markets.
“Two years of relentless house price depreciation ended in the third quarter of 2009,” IHS Global said. “It is not, however, at all clear that the market is on a recovery path. Economic conditions remain dire, with unemployment likely to remain above 10 percent for some time.”
E-mail: lynn@northjersey.com
Despite recent hints that home values may have bottomed out, a Deutsche Bank Securities analyst Friday forecast another drop in the region’s prices — possibly as much as 29 percent.
Deutsche Bank analyst Karen Weaver said the drop is likely because housing in the New York metropolitan area, including Bergen, Passaic and Hudson counties, is still too expensive for many buyers.
“Affordability is the driving force behind the outlook here,” the report said.
Prices “would need to decline another 29 percent just to restore prices to the point in New York’s history when housing was at its most affordable,” the report said. That was in 1998, after a decadelong slump in housing. Weaver used the most affordable point as a benchmark because typically in housing recessions, prices drop to maximum affordability levels.
If, on the other hand, prices simply return to average levels of affordability over the past two decades, prices in this region would fall another 8 percent, Weaver said.
Nationwide, she expects prices to decline another 10 percent to 12 percent.
Weaver’s analysis is aimed at those who invest in pools of mortgages. She cautioned that her forecast is not precise enough to allow home buyers to accurately predict price changes in individual towns or housing markets. That’s largely because the forecast covers a large area, consisting of Putnam, Westchester and Rockland counties, as well as the five boroughs of New York and North Jersey’s Bergen, Passaic and Hudson counties.
The Deutsche Bank report expects greater price drops than many other analysts have predicted.
“There are no ‘forecastable’ factors to support rising home prices,” Weaver wrote. “Would-be homebuyers’ wings are still clipped by high unemployment and tight credit.” In addition, the report said, many homeowners can’t move up because they owe more on their mortgages than their property is worth.
Many other economists predict flat or slightly declining prices in 2010.
Another report released Friday, from IHS Global Insight, said the New York metropolitan area is actually undervalued by about 7 percent. IHS Global Insight considers, among other factors, mortgage rates and the premiums or discounts that buyers have typically expected in an area. The New York metro area tends to be one of the nation’s priciest housing markets.
“Two years of relentless house price depreciation ended in the third quarter of 2009,” IHS Global said. “It is not, however, at all clear that the market is on a recovery path. Economic conditions remain dire, with unemployment likely to remain above 10 percent for some time.”
E-mail: lynn@northjersey.com
https://www.northjersey.com/news/79705747.html#
