Thread: Bloomberg: U.S. Home Prices May Be Lost for a Generation: John F. Wasik

U.S. Home Prices May Be Lost for a Generation
Commentary by John F. Wasik

May 4 (Bloomberg) -- We might be looking at a lost generation for U.S. home values.

Far too many analysts are calling a bottom to the housing market after home prices
in 20 metropolitan areas declined at a slower pace in February, according to the
Standard & Poor’s/Case-Shiller Index.

Don’t be blinded by the glint of optimism in headlines about rising consumer confidence
and slowing price declines. Demographic and market realities tell a more sobering story.

You won’t see a widespread housing rebound in an economy in which 600,000 jobs a
month are lost and foreclosures ravage the most overleveraged areas. These are just
the visible barriers to a recovery.

Mortgage lending has also been an unusually tightfisted process of late. Lenders are
demanding a 20 percent deposit for home purchases, and want impeccable credit
ratings. About 45 percent of U.S. banks surveyed by the Federal Reserve said they
had “tightened their lending standards on prime mortgages.” I suspect that number is
much higher.

Then there’s the reality that the market is glutted with homes. A record 19 million homes
stood empty at the end of 2008.

http://www.bloomberg.com/apps/news?p...d=aiiT.sNeq2YQ