Housing may not return to 2005 high, says Stein
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American house prices may never recover to their 2005 level, according to Gabriel Stein, the chief international economist at Lombard Street Research.
Stein says that five years after it peaked the housing market remains weak and on some measures house prices have further to fall.
“Until households have managed to bring their debt burden to a level they can live with - and this is far from the case yet - they cannot take on more debt,” says Stein. (article continues below)
“But, crucially, even when households have completed their deleveraging, they are unlikely to be prepared to take up debt with the same abandon as the past.”
Stan Shipley, an economist at ISI Capital, an American research and investment firm, says that new housing inventories in America have hit fresh lows and that foreclosures will continue for at least the next 18 months.
Stein says that while the housing market will recover, the question is when and how strongly.
“If by ’recovery’ we mean a situation where volumes or prices have stopped falling, then at least on the volume side, we have reached that point - although not yet on prices.
“If instead we mean a sustained rise in volumes sold or in house prices, that is likely to take considerably longer.”
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