U.S. Home Values Continue to Decline
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The housing market remains in the rut. The S&P/Case-Shiller 20-city index through November showed home values fell 3.7 percent from the previous year.
The 20-city home price index dropped slightly more than the 3.3 percent economists surveyed by Bloomberg had expected, weighed down by foreclosed properties.
According to the widely-cited measure index released on Tuesday morning, 18 of the 20 cities in the index showed a decline since the previous year. Atlanta had the largest drop at 11.8 percent slump followed by Las Vegas at 9.1 percent. Detroit had the biggest increase with a rise of 3.8 percent year-over-year for November.
U.S. home prices fell more than expected in October as foreclosures continue to drag down the housing market. The 20-city home price index fell 0.6 percent in October from the previous month, and 3.4 percent from October 2010.
The Federal Reserve’s Federal Open Market Committee last week announced it expects to keep federal funds rate at zero to 1/4 percent at least through 2014, saying the housing sector remained depressed and business investment has slowed. The federal funds rate is the rate at which banks lend to each other overnight.
The 30-year fixed-rate mortgage averaged 3.98 percent for the week ending Jan. 26, the eighth consecutive week that rate has remained below 4 percent, according to Freddie Mac. Last year, the 30-year fixed-rate mortgage averaged 4.8 percent. The 15-year fixed-rate mortgage averaged 3.24 percent last week, down from 4.09 percent last year.
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Still millions of homes on the shadow market waiting to be sold, millions of people wriggled their way out of foreclosure a few years ago, only to run out of road now. Until the average home price is about 3x the average income, home sales will decline, and so will home prices along with it. The government would have been better off, buying the bad mortgages and then leveling the homes.
Posted by: snewsom2997 | January 31, 2012, 10:40 am 10:40 am
As Elmer Fudd rides off into the sunset. Not to worry though…Maxine Waters is standing in the wings.
Posted by: newcountryman | January 31, 2012, 10:45 am 10:45 am
Home prices were terribly overvalued because of so much buying by investors. It would behoove us as a nation to have a law limiting investing in one family homes by making the taxes owed on the income astronomical. This would keep prices even with incomes so people could afford to buy a home to live in.
Posted by: Librarian53 | January 31, 2012, 10:53 am 10:53 am
Posted by: Librarian53—It would also squash any new construction, if you want to own 5 homes, you can spend you money however you want, if you go bankrupt because you tried to own 5 homes you pay the consequences. Demand is demand whether it is for use or investment(speculation).
Posted by: snewsom2997 | January 31, 2012, 11:04 am 11:04 am
Maxine Waters is standing in the wings.
POSTED BY: NEWCOUNTRYMAN | JANUARY 31, 2012, 10:45 AM 10:45 AM
I’m still waiting for her to try to ‘nationalize the big oil companies’!
Posted by: deanbob | January 31, 2012, 11:15 am 11:15 am
Wow Librarian53 (10:53 AM); Have you thought through what your proposing? No wonder this country is in trouble.
Posted by: newcountryman | January 31, 2012, 11:20 am 11:20 am
Lirbrarian53. Those investors were homeowners willing to pay whatever believing housing prices would continue to rise 7% a year. Therefore, mortgage rates and prices were no problem. There is a saying in the stock market, ” You fatten pigs and kill hogs.” If you don’t truly understand the present and future value of any commodity, you need to stay the heck away or get some solid advice. Honestly, your “theory” makes absolutely no sense..maybe because I don’t even begin to understand what you are saying. Prices usually increase as availability decreases.
Posted by: Salty | January 31, 2012, 12:59 pm 12:59 pm
Geez, where this really hurts is the “boomers” that were counting on their home to provide a nice retirement nest egg. I think this will increase poverty levels-people with nothing but social security, a declining 401K, and less than half what they were expecting on the sale, won’t make it. And I’ve been hearing this “in 2 years the market will correct itself” for four years now. I’m still waiting.
Posted by: jjgittes74 | January 31, 2012, 1:06 pm 1:06 pm
Geez more wealth destroyed by Obama and the liberals. This story should also tell why this happening. The recent numbers from the CBO states real unemployment is 10% and that the rate of growth is projected at only 1% for next year. So dont listen to the Obama lies about the economy we are in a disaster with more Americans going into poverty because of his policies.
Posted by: JEFF | January 31, 2012, 2:02 pm 2:02 pm
Let me guess: It’s Bush’s fault!
Posted by: s | January 31, 2012, 2:40 pm 2:40 pm
Posted by: jjgittes74—The government will not leave well enough alone and let it collapse. Yes people will get burned, but that is the price of paying more for something, than others are willing to pay you, and betting that 30 years of stability is normal.
Posted by: snewsom2997 | January 31, 2012, 3:08 pm 3:08 pm
The housing market continues to decline because market forces are still such that a correction is needed.
The government slowed down this process with intervention, its not clear they’ve ultimately preserved any value, though.
When your house value goes under what you owe on it, that’s incentive to walk away and cause the next foreclosure – it all keeps feeding on itself, in slow motion.
I’m not convinced the government understood the psychology of the market – a wild drop followed by a wild recovery – would have caused some people who hung on – to convince themselves to ride it out. At the same time, speculators would come from nowhere trying to ride the recovery.
Slow motion drop – going on and on…it’s hard for people to give up their homes, but now, they’ve had years to think about it – they don’t see it recovering, and now they may walk away.
I don’t believe for everyone it’s forced – some have a choice, and they are going to bale, as far any add-on help from investors – not so much with the market still heading down.
Posted by: RockoT5000 | January 31, 2012, 3:31 pm 3:31 pm
Let me guess: It’s Bush’s fault!
POSTED BY: S | JANUARY 31, 2012, 2:40 PM 2:40 PM
I thought all’s well in lala land!
Posted by: deanbob | February 10, 2012, 11:49 am 11:49 am
Librarian53 must believe that the government should run everything. I know how to make that happen! Let them tax everybody to death and kill any incentive to engage in business! wow… so much for the American dream, which after all wasn’t so much about buy, buy, buy as it was about being free to choose for oneself what to do with one’s life, one’s income, etc. If the government would back off and let the market correct itself naturally problems would get solved more quickly. The housing bubble was a problem for years and a few politicians knew that the Fed’s artificial stimulation of it would ultimately hurt us all.
Posted by: rebro | February 12, 2012, 1:24 pm 1:24 pm