Posted by Jonathan J. Miller -Monday, September 21, 2009, 1:11 AM
I feel like Moody’s, in their report on the housing recovery, is overreaching.
They suggest that housing won’t recover for a decade.
Moody’s Investors Service threw cold water on optimistic projections of a V-shaped recovery in the battered U.S. housing market, predicting it could take more than 10 years to get back to boom-level prices.
They define “Recovery” as getting back the 40% peak to trough decline of the past several years.
MY KEY POINT – Their 10 year recovery benchmark is predicated on returning to credit-on-steroid-fueled-housing-levels which I believe most people now realize was not actually real. Therefore, the 10 year projection is based on a false premise and unfairly negative. For example, if housing prices remain flat for the next 5 years, don’t you think most will feel like housing has recovered (even if flat doesn’t = recovery by definition)?
It is strange to see Moody’s so ultra negative on a market aftermath that they help create since everything was AAA a few years ago. (Sorry, but I am annoyed).
Their key points:
- It will take ten years to get back the 40% peak to trough that was lost
- The downturn will over correct, meaning a longer time to get back.
- Foreclosures and oversupply
- Hard hit states will be the last to recover
While we are being dire – here’s a nice global recession map.
And map the US recovery – which states are recovering (after all, like real estate, all recessions are local).