U.S. housing prices continue to decline

March 30, 2011 by · Leave a Comment
Filed under: Real Estate News 

I was listening to Bloomberg TV this morning and they are all abuzz about the decline in housing prices.  The debate is whether we can have meaningful economic recovery without a housing recovery at the same time.   I don’t think we can for this reason.  We are all seeming to forget that our economy is still under the full support of the central bank through near zero interest rates and their bond purchase programs.   Our government has now given us a budget ($3.7 trillion) that now stands at 25% of GDP.

This tells me that our economy is very fragile and could not stand on its own and most likely would fall about without a housing price increase to help improve our citizens debt position by getting more equity in their pockets and bring the houses above water.   Things are so fragile that I think we have a 50% chance of another recession in the next couple years.   The indicator is oil prices, it is over $100 dollars a barrel and if you watched what happened when it hit $150.   It was a recession so I am pretty sure this will be the case again.   Hopefully this time we will let the bad debt defaults so we can heal the economy.

BBC News – Seasonally adjusted prices fell in 12 of the 20 metropolitan areas tracked by the S&P/Case-Shiller index.  In four cities, prices were at their lowest in 11 years, with the overall index down 0.2% in January from the previous month.

The average annual price fall across the 20 cities was 3.1%; only Washington DC saw a meaningful rise in prices.  House prices in the US capital city, which in general has fared better than the rest of the country during recent economic downturn, gained 3.6% over the year.  San Diego was flat at 0.1% above January’s price a year ago.  S&P’s David Blitzer said worse declines could lie ahead.

“The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery,” he said.  “Keeping with the trends set in late 2010, January brings us weakening home prices with no real hope in sight for the near future.  “At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing.”

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