The cities that saw the bubble housing boom in the first decade of the century—cities in California, Florida, Nevada and Arizona especially—won’t see the next big boom until around 2025 according to the financial services company, Fiserv. Fiserv expects other markets in the Northeast and Midwest to take a full ten years before price spikes equivalent to 2006 and 2007 return.
For most of the country some level of normalcy will prevail starting in 2011, but the recovery period will be prolonged almost everywhere in the U.S. Factors that will keep housing cycles from a more historic 10 year pattern are the continuing high levels of unemployment and the large inventory of foreclosures.
Fiserv also blames the former widespread practice of predatory lending in cities such as Minneapolis, Chicago, and Memphis, which have led to many foreclosures in many neighborhoods.
Cities Fiserv predicts will recover on a much faster track are Pittsburgh, Columbia, South Carolina and some of the cities in Texas, Washington, and upstate New York.
Housing Market Will Have Excess Capacity for Five Years
On a similar gloomy note, business intelligence company, SNL Interactive interviewed homebuilding space analyst for Stifel Nicolaus & Co., Michael Widner, who predicted that the housing market will have excess capacity for at least the next five years.
If the number of housing starts continues at the current levels then capacity may shrink substantially within three years, but with the predicted ramping up of new housing starts by a number of the major builders, that excess capacity is likely to run for at least five years.
Widner does expect some of the major builders to return to profitability in 2010 and others to follow suit in 2011. Acquisition of cheap land for the next development phase will help to keep costs low for many of these builders. Widner is not optimistic for long term increases in housing value over the next five years, and he believes stocks are trading too high for many of the housing market companies.
Life isn’t about waiting for the storm to pass…
It’s about learning to dance in the rain.
The most difficult thing is the decision to act, the rest is merely tenacity. The fears are paper tigers. You can do anything you decide to do. You can act to change and control your life; and the procedure, the process is its own reward. - Amelia Earhart
"The greatest mistake you can make in life is to continually be afraid you will make one." - Elbert Hubbard