Recovery is of interest to consumers who are hoping against hope that they will recover the unrealized gains in equity that have gone away. They're waiting for the "fever to break" so they can get on with their lives, refinance and pay off the credit card bills again, buy a new boat, or parlay their profit into a more expensive home. Forget it. It's not going to be that kind of recovery. Look around, this is it.
The market is stunted by homeowners who want to move up, but they can't afford to sell their homes. That part of the market will only return if homeowners start paying down their often negative equity. An additional monthly payment along with the required amount will bring down the debt and incrementally reduce the amount of interest due. Just as first time buyers often save up for a down payment on a home, move up buyers will also have a need to save for a down payment on their next home. Accumulated equity in the current home may be largely the result of debt paydown, and not price appreciation.
As recent first time buyers begin to grow out of their starter homes, they will be better positioned to move up to a home that fits their growing needs. The industry has effectively lost a half generation of homebuyers. Any improvement will be evolutionary as post crash purchasers move forward.
What's the difference in today's home buyers? It seems that they have a bit more skin in the game with larger down payments, they have bought post-price crash for the most part, and they will not be as easily tempted to turn any equity accumulation into a new car or boat.
The housing crash is over, and the meat wagons are in the process of hauling away the carnage. Recovery will not be an event marked by any sharp changes, and it will not be a return to the old market.
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