A new survey conducted for FICO by the Professional Risk Managers’ International Association (PRMIA) revealed some less-than-pleasant housing news.
The hotly anticipated home price recovery seems to be getting further and further away.
Nearly 60 percent of bankers surveyed by the popular credit score creator FICO expect home prices to stay below peak-2007 levels until at least 2020.
In other words, don’t expect a quick flip – a buy and hold mentality would probably be best here.
And purchasing real estate because you actually want to live in a home would be prudent, as opposed to buying for investment purposes.
An overwhelming 73 percent of the survey respondents also expect mortgage delinquencies to “remain elevated” for at least another five years.
This would obviously dampen any sign of a recovery, as it would keep the already bloated supply inflated for years to come.
It also means a large number of former owners would be ineligible for home loan financing for some time as well.
Meanwhile, RealtyTrac head honcho Rick Sharga expects a housing price bottom this year, though he referred to it as a “catfish recovery.”
In other words, home prices should finally stop falling at year-end, but remain on the bottom until 2014, at which point they should begin to rise slowly. I guess that’s what a catfish does?
Of course, both these predictions are for home prices on a national level, and some areas will certainly improve quicker than others.
But in hard-hit Detroit, Michigan, the existing underwater borrower would still have negative equity of $7,156 by then.
In Vegas, 2020 home equity for existing underwater borrowers would rise to $1,039 – not a whole lot to look forward to. Especially if they could somehow ditch their current property and get in at today’s prices instead.
If you happen to be a first-time home buyer, you could actually see some healthy appreciation, and gain some precious home equity. After all, if current homeowners stick around, you’ll have quite the head start on them.
Just don’t expect the explosive home price appreciation seen in previous decades. It might take some time for things to get better.
Read more: Should you buy a house now or wait?