Tags: Morgan | Stanley | Home | Prices | Fall | 2012

Morgan Stanley: Home Prices to Fall Up to 11 Percent by 2012

Wednesday, 08 Dec 2010 03:25 PM

U.S. home prices will decline as much as 11 percent as weak demand and rising inventory extend the housing slump into 2012, according to Morgan Stanley.

Prices will be as much as 36 percent below their 2006 peak before finding a bottom, Morgan Stanley analysts led by Oliver Chang wrote in a report today. Sales will stay “depressed” through next year amid tightened lending standards, they said.

“We see the trough occurring in 2012 instead of our previous call of 2011,” Chang said in a telephone interview from San Francisco. Values will be little changed for three to four years after 2012, gaining or losing about 2 percent without factoring in inflation, he said.

As many as 8 million homes are in default or foreclosure and may be offered for sale, known as shadow inventory, according to Morgan Stanley. The looming supply will combine with tight credit and questions about housing-finance regulation to reduce prices 6 percent to 11 percent from current levels, the analysts said.

Housing demand has slumped since the start of the year as a government tax credit expired and unemployment hovers near 10 percent. Sales of existing homes in October fell to an annual pace of 4.43 million, compared with 5.98 million a year earlier and an annual average of 5.81 million over the past decade, the National Association of Realtors reported Nov. 23. The median price was $170,500, down from $172,000 a year earlier.

Douglas Yearley, the chief executive of Toll Brothers Inc., said in an interview yesterday that the worst is over for the housing market. Yearley said 2012 will be a “big year” for his company, the largest U.S. luxury-home builder, after the market changes little next year.

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U.S. home prices will decline as much as 11 percent as weak demand and rising inventory extend the housing slump into 2012, according to Morgan Stanley.Prices will be as much as 36 percent below their 2006 peak before finding a bottom, Morgan Stanley analysts led by Oliver...
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2010-25-08
Wednesday, 08 Dec 2010 03:25 PM
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