Home prices will fall another 10 percent before they stabilize in the second half of next year, Roelof Slump, Managing Director of Structured Finance Experts for Fitch Ratings told investors Thursday.
Slump said the inventory of distressed properties remains high and is expected to cause further home price declines, plus negative macroeconomic trends are expected to continue to impact the mortgage market.
The brightest spot Slump saw in the housing picture is a decline in delinquencies, which are still high but have been improving this year. Although liquidations have slowed, he said that the pipeline of distressed borrowers remains high. With seven to eight million homes in the distressed inventory, the backlog will put pressure on prices and likely cause further price declines.
Consumer confidence is the key to restoring demand in the wake of the expiration of the homebuyer tax credit, he said. Slump forecast an end of the price increases during the first half of the year that were generated by demand stimulated by the credit.
Investors can expect mortgages to continue to perform better than those during the boom period, he said A stable banking sector, improved loan underwriting, greater affordability for new borrowers, tighter regulations and improved disclosure all are contributing to improved mortgage performance in in the future
