US housing sector not to recover till 2010
The US housing sector was the back bone for the US growth during 1990 to 2007 period. But with all the sub-prime crisis blowing out of proportion, we had Lehman Bros, closing down all of a sudden in 2008 middle.
Also Fannie Mae and Freddie Mac which control over 60% of the total US housing financing reported huge losses due to bad loans in their portfolio. With falling home prices, more and more people have started defaulting on their home loan repayments and preferred to go for selling their home at a loss. This has resulted in bad debts for the financing banks and institutions, and also more downward pressure on home prices across the country.
With the unemployment rate hitting a all time high of over 8% in February 2009, we can only expect the housing crisis to deepen in the coming months because there would be no takers for homes, and there could be more additions to the home inventory.
And those people who are retaining their jobs currently, might also think twice before making any long term financial commitment, because their confidence in retaining the current job and growing on that will be very low. And they also would be expecting the house prices to come down further before investing.
So do not expect any recovery in the US housing market before 2010.
