The housing market suffered a blow in 2010 as the result of a major drop in the sales of previously-owned homes. According to the National Association of Realtors, existing home sales reach a disappointing 13-year low in 2010. Unfortunately, there is very little hope for improvement in the coming years.
High Unemployment, Foreclosures and Too Many Houses to Blame
The National Association of Realtors reported on Thursday that existing home sales dropped 4.8 percent to 4.91 million units in 2010. While this was only slightly fewer than the sales seen in 2008, it was still the weakest year since 1997.
A number of explanations have been given as to why sales are so low. High unemployment is at the top of the list with the rate still sitting 9.1 percent as of Dec. 2010, according to the U.S. Bureau of Labor Statistics. Many Americans still don’t have the money to apply to a major purchase like a home.
The record number of foreclosures is also deterring potential buyers from purchasing homes. They are afraid that home prices have yet to hit bottom and don’t want to find themselves straddled with an underwater mortgage soon after purchasing a home.
Also, as explained by David Wyss, chief economist at Standard & Poor’s in New York, to the Associated Press, too many houses were built during the boom. “Now after the crash, it will take us a long time to get back to normal,” he said.
When Will the Market Improve?
Experts like Wyss and Mark Zandi, chief economist at Moody’s Analytics, discourage Americans from assuming the housing market will improve anytime soon.
“The job market is still very weak, and unemployment is very high. Until we get more jobs, people will be reticent about buying homes,” Zandi told AP.
He explained home prices are likely to fall another 5 percent this year, which could encourage improved sales of previously-occupied homes. However, with mortgage interest rates expected to rise after a year of record lows, some believe prospective homeowners may still feel wary about buying.
While jobs are expected to pick up in 2011, a great enough change is not expected to occur to make a difference in home sales. As a result, some experts predict that sales number will not look healthy again until at least 2013–and maybe not until 2014.
