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Home Prices: The Coming ‘Double Dip’

Dennis Norman

Dennis Norman

Yesterday the S&P/Case-Shiller Index report for October was released and was filled with bad news on the housing market. The report revealed that home prices decreased in all 20 metro areas covered by the report from their September levels and only four of the metro’s showed a year-over-year price gain in October.Furthermore, six metros – Atlanta, Charlotte, Miami, Portland (OR), Seattle and Tampa – hit their lowest levels since home prices started to fall in 2006 and 2007.

This news comes at a time when we have seen a couple of bits of positive news on the housing market, so of course it is disappointing but not unexpected. It look us a long time to get into this mess and it’s going to take a while to get out. David Blitzer, the Chairman of the Index Committee at Standard and Poor’s, comments on the report are rather bleak. Mr. Blitzer said “the double-dip is almost here, as six cities set new lows for the period since the 2006 peaks. There is no good news in October’s report. Home prices across the country continue to fall.”

Even though I have been somewhat encourage by sales reports over the past couple of months, at least from the standpoint that it appears we’ve hopefully seen the worst of it, Mr. Blitzer is not so optimistic about those reports either. He said “the trends we have seen over the past few months have not changed. The tax incentives are over and the national economy remained lackluster in October, the month covered by these data. Existing homes sales and housing starts have been reported for both October and November, and neither is giving any sense of optimism. On a year-over-year basis, sales are down more than 25% and the months’ supply of unsold homes is about 50% above where it was during the same months of last year. Housing starts are still hovering near 30-year lows. While delinquency rates might have seen some recent improvement, it is only on a relative basis. They are still well above their historic averages, in both the prime and sub-prime markets.”

So there you have it…sounds like it’s going to be a long, cold winter for the housing market…

 

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