Home Prices Declining... Still?
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The housing market continues to struggle, the economy is still sputtering, another wave of foreclosures will start at the end of this year and, overall, the Case-Shiller index (and it's 10-city index) reported its worst annual reading ever per home values.
Every city in the 20-city index reported declines in home prices since last June; in seven of those cities prices are off by more than 20 percent. Nationally, the average home price is down 15.9 percent from this time last year (and in 2007 we were already facing diminishing home values).
There are two things one should take from information like this:
1. We've recently had a slowdown in home price declivity and the amount of foreclosures, however, both problems are still a major component of the mortgage crisis equation. Therefore, if cities like Las Vegas and Miami, two cities hit the hardest (other than Los Angeles) during the housing crisis, have yet to show any signs of a turnaround, then it must mean that these major markets are struggling just to put the brakes on housing problems, which results in an overall national price decline.
2. If we're still expected to face $500 billion in more foreclosure losses due to the interest rate resets of option-ARM loans in the coming months (especially in California), how are millions of more foreclosures going to effect an already abysmal housing market?
The Case-Shiller index is considered by economists to be the most reliable indicator of American home values, and its these same economists who are not too positive about housing matters yet to come.