The ailing U.S. housing market, a key driver of the world’s biggest economy, is poised to get worse before it gets better—but it will get better.
American homeowners received notices of default, auction or repossession on a record 2.9 million properties last year, up two per cent from a year earlier in the midst of the recession, according to online foreclosure tracking site RealtyTrac Inc. More than half of the filings occurred in five states: California, Florida, Arizona, Illinois and Michigan. Rick Sharga, RealtyTrac’s president, recently told Bloomberg News that he expects foreclosure filings to climb 20 per cent in 2011. “We will peak in foreclosures and probably bottom out in pricing, and that’s what we need to do in order to begin the recovery,” Sharga said.
There’s already a glimmer of light. A report released last week by TD Economics said mortgage delinquency rates, which refers to overdue payments, but not outright defaults, are on the decline. At the same time, sales of existing homes are bouncing back—up by 12.3 per cent in December, reaching their highest level in seven months—as homebuyers take advantage of cheap prices and easier access to credit.