US Housing Market Recovering Faster Than Europe’s
Excerpts from Rebuilding The Global Housing Market
As the global housing market shows some signs of recovery, markets are re-emerging at different speeds, depending on the strength of individual real estate fundamentals. Moreover, industries that rely on the housing market have adjusted to lower demand and will likely stay cautious until they see clear signs of a rebound, says Standard & Poor’s Ratings Services in a special report on the global housing market.
The U.S. housing market, for example, has shown some momentum. Housing starts and home sales are climbing back from lows early this year, and home prices are rising after sharp drops that began in 2006.
Prices may suffer a setback this winter, in part because unemployment, now 9.8%, is still rising – Standard & Poor’s Chief Economist David Wyss.
Moreover, an $8,000 federal tax rebate for first-time homebuyers is scheduled to end in November. And foreclosure filings in the third quarter were at record levels.
For a few U.S. homebuilders, credit quality is firming, though that could change in the months ahead, as the negative outlooks on 11 of the 15 homebuilders we rate indicate. Despite signs of a slight real estate rebound, we believe our ratings on many of these companies will likely remain under pressure through the balance of the year and probably into 2010.
In Europe, the housing outlook is mixed. U.K. housing prices are rising modestly, though that may be a sign of tight supply. But overall, European real estate fundamentals remain weak. Feeble employment prospects and restricted levels of mortgage financing, along with a likely easing of fiscal stimuli and rising interest rates, promise to make the road to recovery long–and possibly could result in backsliding. House prices are still slipping in Ireland and Spain, while prices in France appear to have hit bottom and may stay there for a while. And the reported arrears, or missed payments, on loans backing European RMBS that we rate may have risen sharply, but more recently, the situation may be improving.
Elsewhere, the Japanese real estate market remains depressed due to the weakened economy. Land prices have continuously declined for the 12 months starting in July 2008, though there have been signs in recent months that prices may be bottoming out.
You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
