I feel like Moody’s, in their report on the housing recovery, is overreaching.

They suggest that housing won’t recover for a decade.

Moody’s Investors Service threw cold water on optimistic projections of a V-shaped recovery in the battered U.S. housing market, predicting it could take more than 10 years to get back to boom-level prices.

They define “Recovery” as getting back the 40% peak to trough decline of the past several years.

MY KEY POINT – Their 10 year recovery benchmark is predicated on returning to credit-on-steroid-fueled-housing-levels which I believe most people now realize was not actually real. Therefore, the 10 year projection is based on a false premise and unfairly negative. For example, if housing prices remain flat for the next 5 years, don’t you think most will feel like housing has recovered (even if flat doesn’t = recovery by definition)?

It is strange to see Moody’s so ultra negative on a market aftermath that they help create since everything was AAA a few years ago. (Sorry, but I am annoyed).

Their key points:

  • It will take ten years to get back the 40% peak to trough that was lost
  • The downturn will over correct, meaning a longer time to get back.
  • Foreclosures and oversupply
  • Hard hit states will be the last to recover

While we are being dire – here’s a nice global recession map.

Click to expand

And map the US recovery – which states are recovering (after all, like real estate, all recessions are local).

6 Responses to “Moody’s Overcorrects – 10 Years To Go Before Housing Recovery”

  1. Eric Hempler says:

    I was questioning their stats as well. Glad to see my thoughts were supported.

  2. Bill says:

    Agree on that. We see a few flat years and, I’d think, we’re going to have some happy folks. The definition of recovery is off. Nice post…thanks.

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  4. Edd Gillespie says:

    Maybe Moody’s buys into the proposition that the highest point is where prices are supposed to be. Did we learn nothing about artificial from the slide we are on? I’d go for “affordable” as a realistic target for the way prices should be. I frankly look forward to a market that never sees that kind of artifice again. It is simply too hard on the people who are trying to make a living and pay their mortgages.

  5. Anonymous says:

    nobody even listens to moody’s anymore after last year. I’m still surprised that they are in business.