Lereah: Full Housing Recovery Not Yet in Sight

WASHINGTON, May 18 /PRNewswire-USNewswire/ -- Despite signs that housing sales
may have reached bottom during the current housing recession, a full housing
recovery is not yet in sight and home values will continue to fall during the
next several quarters wrote noted housing economist David Lereah in a Market
Commentary currently posted on Real Estate Economy Watch.

"The three major housing measures - existing home sales, new home sales and
housing starts - are hovering above their cyclical lows posted in January of
this year. And home values are currently falling at a slower pace than the
pace registered in January. It is possible that the worst may be behind us;
but it is another thing to say that the housing markets are on the road to
recovery," wrote Lereah.

Noting that a large percentage of sales are foreclosures, especially in
Western states, which do not necessarily reflect a healthy marketplace, Lereah
argued that in today's residential real estate markets both quantity and
quality matter. "An increase in home sales and residential construction is a
welcomed expansion of housing activity, creating jobs, homes, and business
profits/revenue." But a decrease in home values reduces household wealth and
household spending.

"Unfortunately, a full housing recovery is not yet in sight. Over twenty
percent of homeowners are underwater (i.e., their loan balances exceed the
value of their homes) and as home values continue to fall, that percentage may
get worse. An oversupply of homes in the housing sector combined with a steady
dose of foreclosure sales exerts further downward pressure on home values,"
Lereah wrote.

"Only when home values stabilize, will we have a true recovery in the housing
markets," he said. In an earlier commentary published on the site last week,
he said the recovery will come slowly and any rebound this year or in early
2010 will be modest at best.

David A. Lereah, president of Reecon Advisors, is a recognized economist
expert in the real estate and financial services industries. Real Estate
Economy Watch is published by Reecon Advisors, Inc., an independent real
estate economy and information company providing insight, analysis and
intelligence for the residential real estate markets.

SOURCE Real Estate Economy Watch

Steve Cook, +1-202-257-3652, scook@reeconadvisors.com, for Real Estate Economy
Watch