Don't look for a rebound in the U.S. housing market this summer.
Economists and housing industry leaders meeting in Dallas this week predict it will be very late 2008 or into 2009 before the battered home market begins to recover.
"I think we are at the bottom, but I think the bottom is very rocky and long," said Robert McLeod, chairman of San Diego-based Newland Communities, which has several housing community projects in Texas.
While he sees some light at the end of the tunnel, "it's not going to feel very good until about the third quarter of 2009," Mr. McLeod told members of the Urban Land Institute on Friday. The international real estate organization is holding its spring meeting here.
Developers and builders who are trying to sell houses and condos say many potential homebuyers are still fearful of the market.
"Unless they have a real need to make a housing buy now, they are reluctant," said Ron Terwilliger, CEO of Trammell Crow Residential, which builds apartments and sells condominiums in markets across the country, including Dallas.
"The thing that's most difficult for buyers is to gain the courage that prices have hit the bottom," Mr. Terwilliger said. "You can tell people are afraid of making a mistake."
Some builders are going so far as to provide guarantees to buyers that they won't suffer a decline in home value shortly after a purchase, he said.
Overall home prices have dropped more than 8 percent nationally so far this year. In North Texas, median home sales prices are down about 3 percent through April.
Analysts say that home prices must come down even further before buyers can be enticed back to the market.
"A lot of the adjustment in the housing market I think is complete, but we probably need to go a little bit further," said Morgan Stanley economist David Greenlaw. "To make housing look cheap, you need another 5 or 10 percent drop in home prices."
Also, the pain caused by reckless home lending won't be over this year, market watchers warn.
Almost $680 billion in adjustable-rate mortgages are scheduled to reset this year – often resulting in higher payments, said Jim Gaines, an economist with Texas A&M University's Real Estate Center.
"We think the pressure nationally is going to continue well through 2009 and possibly into the first half of 2010," Dr. Gaines said at a Friday meeting of the National Association of Real Estate Editors.
