From CNBC:
It’s official.
Home prices have double dipped nationwide, now lower than their March 2009 trough, according to a new report from Clear Capital.
It was inevitable, and it was predicted (by me for sure) that a surge in sales of foreclosed properties and a big push by banks to facilitate short sales would force home prices down dramatically.
Sales of bank-owned (REO) properties hit 34.5 percent of the market, according to the survey, resulting in a national price drop of 4.9 percent quarterly and 5 percent year-over-year…
Except in a few, government-funded markets (ie, DC and environs) if you are planning on buying a home, don’t. In the worst hit markets (such as Florida and Nevada), my guess is at least another 25% on the downside. I purchased my home in 2005 for $396,000.00; the exact same model just sold in foreclosure down the street for $149,900.00. I fully expect this house to bottom out at about $120,000.00…and then stay there for quite some time. One should not expect the home prices of 2007, in real terms, to be reached again in our life times.
Partially this is a reflection of just how over-blown the housing market became, but it is also because the demographics of the United States – aging population, and all that – simply will not provide the sort of demand for housing we saw from the 1950’s until the early 2000’s. This is not to say that home ownership is a bad deal, but it won’t ever again be the piggy bank it was from, say, 1995 until 2007.
Here is the really bad news – all that debt and money-printing we’ve gone through over the past three years? Designed to sustain and restore 2007 housing price levels. Completely wasted effort…and now we’re stuck with the debt and the devalued currency.
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