Home prices hit new bottom
Values fall to their lowest mark since the crash began. It's officially a double-dip housing recession.
This post comes from Marilyn Lewis at MSN Money.
Turn back the clock. It's 2002 all over again. That's where housing prices are, on average nationally.
A new S&P Case-Shiller Home Price Index for the first quarter of 2011 shows that the dreaded double-dip nightmare scenario for home prices is in fact here.
After hitting what looked like a bottom, prices began recovering in 2009, only -- as the report reveals -- to fall even further. Post continues after video.
The S&P index measures prices over time for a group of 20 key cities and another group of 10 cities. The new report says:
"This month's report is marked by the confirmation of a double-dip in home prices across much of the nation," according to David Blitzer, chairman of the (S&P) index committee. "Home prices continue their downward spiral with no relief in sight."
It's now clear that there would not have been a double dip -- only one, long continuous slide in home values -- had not government homebuyer incentives in 2009 and early 2010 lifted the market temporarily, Blitzer says.
The depth of the decline
Prices fell 4.2% in the last quarter, according to Case-Shiller -- this, on top of a 3.6% drop in the fourth quarter of 2011. Prices are down 5.1% from this time last year.
"The downturn is the most acute since prices began falling several years ago," reports HousingWire.
The Associated Press blames "foreclosures, a glut of unsold homes and the reluctance or inability of many to buy" for the slide: "… prices in a dozen markets have reached their lowest points since the housing crisis began."
The New York Times writes:
Housing is in persistent trouble, industry analysts say, not only because so many people are blocked from the market -- being unemployed, in foreclosure or trapped in homes that are worth less than the mortgage -- but because even those who are solvent are opting out.
The National Association of Realtors offers another explanation. While last week announcing more bad housing news -- the NAR's gauge of pending home sales fell in April after looking good in February and March -- the group's chief economist, Lawrence Yun, also acknowledged the impact of economic problems: "The economy hit a soft patch in April from sharply rising oil prices, widespread severe weather with the heaviest precipitation in 20 years, and a sudden rise in unemployment claims."
But, mostly, Yun seems to blame tight-fisted lenders for cramping the real estate recovery:
"No doubt the continuing excessively tight mortgage underwriting process is making the housing market recovery unnecessarily slow," he said. "Lenders and bank regulators need to be mindful of the historically low default rates among mortgage borrowers of the past two years. A robust economic and housing market recovery cannot occur as long as banks continue to hold on to huge cash reserves."
The sea change in the country created by foreclosures and crashing home prices is reshaping reality for the current generation of Americans. The rate of homeownership, which had peaked at 69.2% in 2004, has dropped to 66.4%, a level last seen in 1998.
Housing experts -- many of them, anyway -- expect price declines to continue for some time. Some predict a turnaround later this year, others in 2012.
American consumers are less optimistic: A Trulia-RealtyTrac poll last week found that 54% of U.S. adults don't expect a recovery until 2014 -- or later.
Still, each region and each city has a unique experience, some better and some worse than the national average. (For a look at how the 20 Case-Shiller cities are doing, see this index blog.)
In 12 of the cities, prices hit new lows for the last four years: Atlanta; Charlotte, N.C.; Chicago; Cleveland; Detroit; Las Vegas; Miami; Minneapolis; New York; Phoenix; Portland, Ore.; and Tampa.
The AP adds:
… the damage is now spreading to areas that had long escaped the worst of the crisis. They include once-thriving markets, such as Dallas, Denver, Minneapolis and Cleveland. Economists regard them as housing bellwethers -- metro areas that are reliable indicators of where national prices are headed.
Denver and Dallas are on pace to hit post-housing bust lows in the next few months.
Other cities may be pulling out of trouble: Prices in Washington, D.C., and Seattle rose in March. Other coastal cities -- namely San Francisco, San Diego, Los Angeles and Boston -- are not as hard-hit, says the AP.
The Times, after describing a flourishing market for home rentals, sums up:
"The emotional scars left by the collapse are changing the American psyche," said Pete Flint, chief executive of the housing Web site Trulia. "There was a time when owning a home was a symbol you had made it. Now it's O.K. not to own."
More on MSN Money:
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Unfortunately most of the richest people in the world where invested in financial paper instruments tied to the dollar. They mastered and controlled vast quantities of stocks, bonds, certificates of deposit, savings accounts and much more. Most of this financial investment s was not worth the value of their paper. The economic collapse was harder on the former rich. Obama finally had made everyone to suffer equally and in that why he reached his socialist utopia. The former rich had more assets to lose and further to fall down the economic ladder. You could say they were in an economic freefall. Since many wealthy people in New York City lived in fancy, exclusive top floor penthouses, they made a greater splash when hitting the pavement below. When Obama heard the sounds of crashing bones and saw the broken limp bodies and blood on the sidewalks, he said “Praise be to Allah.”
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