Keep your fingers crossed
The S&P/Case-Shiller Home Price Index was released today, and the news was not encouraging. The index is a survey of median housing prices in 20 major U.S. cities, and it showed that prices fell 0.5 percent from February to March. This was the sixth straight monthly decline. Home prices dropped 3.2 percent from the fourth quarter of 2009 to the first quarter of 2010. These figures are not seasonally adjusted because the creators of the survey believe that the unusual current market conditions introduce a lot of noise into the seasonally adjusted numbers.
The price declines, along with tightening credit, high unemployment, fears of a second half economic slowdown due to the Euro debt contagion, and the possibility of conflict on the Korean Peninsula have engendered fears of a double dip.
Despite mortgage rates being near historic lows and government incentive programs, housing prices have only risen 3 percent from their low point in April 2009. Co-creator of the report, Robert Shiller said “I’m worried still about the risk of a double dip”.
Prices fell in 13 of the surveyed cities while increases were reported in only six areas, with one market remaining flat.
Although consumer confidence is slowly increasing, stocks have been extraordinarily volatile as Wall Street remains spooked by ongoing debt troubles in Europe.
With a large amount of shadow inventory and record numbers of foreclosures in recent months, I expect to see downward pressure on home prices for the foreseeable future.
Where do you think home prices will head? Let us know in the comments section below.
Loading ...
RSS feed for comments on this post.
Leave a comment