Look out below...
The fine bloggers over at Calculated Risk have a good article today about the future of housing prices. In essence the article asserts that there have been declines in home values in both May and June that have yet to fully show up in many measures of home prices.
This premise is based upon data from Campbell Surveys that shows prices for short sales fell 6.3%, move-in ready foreclosures fell 6.8 percent, and non-distressed properties dropped 4.6 percent.
The decline can likely be traced to several factors. First is the collapse in demand for homes following the expiration of the first time home buyer tax credit at the end of April (the overall weakness of the economy also plays a part in the lack of demand). The next factor is the massive overhang of houses on the market and in the hands of banks and lenders. Finally, the sheer volume of foreclosed and distressed homes negatively affects the price of homes.
The article says that these declines will not show up in home prices indices such as the Case-Shiller index until later in the fall because the index is a three-month composite that lags two months. Further complicating matters is that there is a delay between signing a purchase contract and closing on a home. The sales are not reported and considered final until closing.
I suppose the takeaway is this: housing prices are falling right now, although many indices will not show this drop-off for some time. This is something to bear in mind if you are buying or selling a home now or in the near future. But then again, if you are buying or selling a home, none of this is news to you.
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Jeff Ragan
July 28, 2010 @ 6:38 am
The housing slump isn’t over.
Tax credits and historically low mortgage rates have failed to lift home prices so far this year. Prices fell 0.5 percent in March from February, according to the Standard & Poor’s/Case-Shiller 20-city index released Tuesday.
That marks six straight months of declines – a sign that the housing market is going in reverse.
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