No recovery in sight until 2014

The San Francisco Federal Reserve Bank recently released research indicating home building will not recover until 2014, and only if housing prices recover and foreclosures decrease drastically, Reuters reported.

Consumer confidence continues to drop with a heavy 9.2 percent unemployment rate and a mere 1.8 percent growth in the U.S. economy in the second quarter. William Hedberg, a San Francisco Federal Reserve Bank research associate, told the news source that both an increase in home prices and a depletion of the foreclosure inventory will have to occur before any real recovery can be experienced in the housing market.

According to the research, for the market to return to pre-2004 levels by 2014, foreclosures would need to drop by 50,000 per quarter in 2012, and home prices would need to bottom out and start to climb back up by 2013.

This prediction can only happen if the improved housing market helps to regain lost consumer confidence. A recent Rasmussen Report found consumer confidence is 67.7, down three points from three months ago and down 26 points from its peak for 2011. The data showed 62 percent of respondents believe homeowners who cannot afford to make increased mortgage payments should sell their homes and downgrade to a less expensive one. In terms of value, 11 percent believe their homes will improve this year, and only 43 percent of respondents believe buying a home is the best investment for a family, which is the lowest level ever recorded.  

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