Housing Index Is Expected to Show a New Low in Prices
By DAVID STREITFELD
NYT
SAN FRANCISCO — The desire to own your own home, long a bedrock of the American Dream, is fast becoming a casualty of the worst housing downturn since the Great Depression.
Even as the economy began to fitfully recover in the last year, the percentage of homeowners dropped sharply, to 66.4 percent, from a peak of 69.2 percent in 2004. The ownership rate is now back to the level of 1998, and some housing experts say it could decline to the level of the 1980s or even earlier.
Disenchantment with real estate is bound to swell further on Tuesday when the most widely watched housing index is all but guaranteed to show that prices of existing homes sank in March below the lows reached two years ago — until now the bottom of the housing crash. In February, the Standard & Poor’s/Case-Shiller index of 20 large cities slumped for the seventh month in a row.
Housing is locked in a downward spiral, 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.
(More here.)
NYT
SAN FRANCISCO — The desire to own your own home, long a bedrock of the American Dream, is fast becoming a casualty of the worst housing downturn since the Great Depression.
Even as the economy began to fitfully recover in the last year, the percentage of homeowners dropped sharply, to 66.4 percent, from a peak of 69.2 percent in 2004. The ownership rate is now back to the level of 1998, and some housing experts say it could decline to the level of the 1980s or even earlier.
Disenchantment with real estate is bound to swell further on Tuesday when the most widely watched housing index is all but guaranteed to show that prices of existing homes sank in March below the lows reached two years ago — until now the bottom of the housing crash. In February, the Standard & Poor’s/Case-Shiller index of 20 large cities slumped for the seventh month in a row.
Housing is locked in a downward spiral, 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.
(More here.)
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6 Comments:
Good point about the increasing number of home owners who have negative equity feeding back into selling pressure feeding back into more home owners underwater. Inflation seems like fun on the way up, and leverage is fun on the way up, but both deflation and leverage is a real bitch on the way down!
That makes about as much sense as the over inflated value they placed on it with this valuation. Especially when they lied to everyone saying that it was going to be revenue neutral then changed their story after the appeal deadline was over. My taxes need to go down, not up. I don't use anywhere near the service that I pay for. Make the people that don't pay anything pay their fair share. Also, if they want "Bright beginnings" make the people that use it, pay for it. I shouldn't have to pay the daycare of other people's kids.
Another recession is right around the corner led by a devaluation of the dollar due to all the cheap money sloshing around from excessive gov't spending. Gas and food prices will continue the upward spiral, leaving consumers strapped. Not exactly the ideal environment to go into debt with a home mortgage. Home prices will continue to sink.
I have lived through three housing bubbles--the mid-seventies, the late 80's and, the mid 2000s, and have purchased three houses. My experience has taught me to buy when the experts say rent and sell when they say buy.
This is just the beginning. People still think that we will be able to pick up the economy where we left it in 2008. It’s not going to happen, not now, not anytime soon, not in the future. We're playing a different game now. And house prices will have to come down drastically to get the market moving again, we will have many more months like this, some a bit better, some worse.
Home ownership is a good idea as long as the housing market is liquid and prices are stable or rising. Unfortunately, many families are stuck in houses they can’t sell either because there is no buyer or because they are underwater on the mortgage. And worse, if you’re in such a situation and you lose your job, your immobility makes it harder for you to sell your labor. Today, it makes much more sense to rent.
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