Housing Could Take Double Dip Down In 2010

[Purveyor]

SAN DIEGO (MarketWatch) -- Despite signs of stabilization at the end of 2009, next year could prove treacherous for the housing and mortgage markets as a variety of woes could rekindle the falloff of the last two years, according to mortgage-industry veterans speaking at the Mortgage Bankers Association annual convention here.

"I'm a firm prophet of the 'W' shaped recovery. Housing is going to go down again in the first quarter of 2010," said Steve Horne, CEO of Wingspan Portfolio Advisors, a firm that facilitates loan modifications. "The real healing won't begin until all these nonperforming loans start trading in earnest, until we get these borrowers back on their feet."

David Lowman, CEO of Chase Home Lending, also thinks the mortgage market could run into trouble early next year, especially if the Federal Reserve ends its purchases of mortgage-backed securities, a strategy that has artificially supported liquidity and kept mortgage rates at historic lows.

"A lot does depend on how long the government keeps its buying up," he said. "Rates are at all-time lows, but once the buying stops we're going to come to a pretty hard stop. We're likely to see a much smaller mortgage market after the second quarter and later in 2010."

"We still have a crisis in the number of people who can't pay their mortgage and we haven't seen the peak of that yet. It's going to weigh on us for several years," he said.

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http://www.marketwatch.com/story/housing-could-take-double-dip-down-in-2010-2009-10-13

[Warpy]

1. No surprise, the winter is usually lousy for home sales

and people who need to sell this time of year are going to be knocking the price down if they can't afford to keep the place.

It wouldn't be this way if so much inventory was being held off the market to support prices. Housing would have bottomed and would be on the way back up by now.