A recent report from Fitch Ratings claims that home valuations are still inflated and will continue to decline even as some industry experts say they are reaching their bottom, HousingWire reports.
According to the company, home prices are still 9.1 percent too high, and will need to shed this over-valuation in order to start to recover. Fitch analysts believe that the fragile job market coupled with marginal growth in gross domestic product could cause this to occur.
Meanwhile, the report noted that strict lending regulation continues to hinder a recovers, as only prospective buyers with sizable down payments and positive equity on current properties are able to qualify for new home loans and refinances.
In addition, experts believe the recent $25 billion settlement reached between the nation's largest lenders and homeowners who were wrongfully foreclosed on will only lengthen the time it will take the industry to work through the foreclosure backlog and REO inventory.
"The settlement’s modification and foreclosure guidelines, together with the process changes needed to meet the terms of the agreement, are expected to extend the loss-mitigation process for seriously delinquent borrowers," The analysts said, according to HousingWire. "However, Fitch does not expect the settlement to materially impact liquidation speeds for existing REO inventory."