Out of Control Policy Blog

Housing Prices Still Spiraling Down

Here is a visual of housing prices as updated from this weeks Case-Shiller numbers. The data through March of this year is not looking good. A number of economists and journalists have been calling this a double dip in housing prices, and you'll note that there are several cities that saw prices start to tick up around March 2009 only to come back down. But really, the temporary stabilization in housing prices in 2009 was only due to demand stolen from the future by federal support programs, it was all housing market fauxcovery. 

The unfortunate aspect of this story is that we need these price to keep falling for a few reasons: one, lower prices will mean more demand from buyers and a fast pace of home purchases to start clearing out the massive housing inventory in America; two, if prices need to fall a bit more to get back to the historical housing price trend in housing. 

Housing prices june 2011
Source: S&P/Case-Shiller

There is a lot in this chart, and it might be difficult to make out everything, but nearly every city has either been on the decline since 2006 or, after a short uptick in 2009, has returned to a downturn. In March, the twin cities saw the sharpest continued drop, as prices in the Minneapolis area fell 3.7%. Only Washington DC has seen a steady increase since 2009, rising 1.1% for March. Seattle also saw a 0.1% increase in prices in March.

The WSJ has a few more details on the story:

U.S. home prices fell 4.2% in the first quarter of 2011, hitting a new post-bubble low and sending the battered housing sector into a double dip, according to the S&P/Case-Shiller home-price index released Tuesday. Twelve of the 20 metropolitan areas tracked in the index posted new lows in March, and prices nationally have fallen 5.1% in the last year, pushing them back to 2002 levels. "This month's report is marked by the confirmation of a double-dip in home prices across much of the nation," said David M. Blitzer, chairman of the S&P Index Committee. "Home prices continue on their downward spiral with no relief in sight."

Separately, the mood among U.S. consumers fell steeply in May, dragged down by more pessimism about job prospects and future incomes, according to a report released Tuesday. The Case-Shiller index of 10 major metropolitan areas fell 0.6% and the 20-city index was down 0.8% in March from February. Compared with a year earlier, unadjusted March prices fell 2.9% for the 10 major markets while the 20-city index dropped 3.6%.

See the whole article here.

Anthony Randazzo is Director of Economic Research


« Prioritizing Transportation Investments: A Note… | Main | ICYMI: Brown v. Plata Ruling… »




Out of Control Policy Archives