Housing risks still lurk even as buyers return

On the surface, a glimmer of confidence is returning to the battered U.S. housing market, after more than three years of gut-wrenching defaults, price slumps and foreclosures.

But investors and homeowners in California, the most populous U.S. state and a benchmark for housing across the country, are bracing for another fall as emergency government support measures fall short or expire.

"All that has been achieved is to put off the real pain until later on," said Mark Jacques, a mortgage broker in Corona Del Mar, California. "I'm hunkering down for the storm."

California led the United States when housing prices soared early this decade, spurred by an array of public policy incentives to encourage home ownership. The boom fueled a frenzy of lending and spending that drove the U.S. economy.



But California proved to be the epicenter of reckless lending that pushed housing throughout most of the United States over a cliff in 2007, triggering a credit crisis that plunged the world economy into recession.


The sobering view now from ground zero of the U.S. property market underscores the problems faced by President Barack Obama as he tries to fix the U.S. economy.


Washington is trying to stem rising numbers of homeowners who cannot afford their mortgages as job losses mount.

Housing prices have fallen to levels not seen since 2003. But even investors pouring millions of dollars back into real estate say it may take up to four more years for California's housing market to settle.


The reasons why -- rising foreclosures, joblessness and tight credit -- are not unique to the state and may have already slowed a recent recovery in places like Florida.


A first test of the U.S. housing rebound could come with the scheduled November 30 expiry of an $8,000 tax credit for first-time buyers.