Should homeowners brace for more financial pain?
The US has recovered from the recession and housing bubble decline, and things look up for real estate….didn’t they?
Hold on, Turbo. Marketwatch reports that the most recent Case-Shiller home price index indicates a “not-seasonally adjusted” .2 percent drop for 20 major American cities for December 2009. Prices did rise in a bit of a quick payday for Los Angeles, San Diego, Phoenix and Las Vegas, however. Adjusting for the season, the price rose .3 percent in that month. Perhaps it’s like the math used to depict the actual unemployment percentage in America?
We’re decaying, just not as fast
“The pace of deterioration has stabilized for now,” David Blitzer of Standard & Poor’s tells Marketwatch. “However, the rate of improvement seen during the summer of 2009 has not been sustained.” The data for the last year indicated a drop in the average home price of 2.5 percent.
Home prices and personal wealth decay together
There will always be the obvious connection between a drop in personal wealth and falling home prices. The reason why is that homes are usually the biggest assets that people hold. The housing bubble’s bursting put many people in saving mode when the nation needed them to continue spending. Prices, according to the Case-Shiller index, are currently at summer 2003 levels.
This is well and good, but not if another bubble isn’t growing
Joshua Shapiro of MFR Inc. tells Martketwatch that things aren’t as rosy as one might think. The homeowner tax credit could be propping the market up artificially on the Case Shiller index. More foreclosures could be in store. “While much of the impact of the sub-prime disaster on prices at the bottom end of the market may well be behind us, there is likely more pain to come further up the price spectrum,” Shapiro said.
Is Congress creating a new housing bubble?
Many economists are predicting a similar forecast for disaster on the horizon. Quick payday, if artificially induced here, could be a smokescreen. It’s still a good idea to be careful out there when it comes to buying, I think.
