Colli Real Estate

Housing prices are down (again) and will continue to fall!

Data from the Case Shiller home has last week. As I said before, there is evidence of home many awards, but Case Shiller gives the most accurate picture of the housing market, since Measures of repeat sales in apples to apples comparison. Therefore you must be careful when the data comes out (last Tuesday of each month).

The data now covers the month of March 2009 and it is not pretty. In fact, the decline in prices from one month to prepare new records in a number of cities, including New York (-2.5%) and dramatically in Minneapolis (-6.1%), apparently, the worst monthly drop in the city index "of history.

Interestingly, after Armageddon has crushed many areas metropolitan United States later this month, is only now that New York is falling off the cliff. After being declared "immunized" against the housing crisis by many gurus of real estate reality is finally setting in the Fall of New York Monthly 2.5% in February and March 2009, may not seem like much given the catastrophic declines have posted other cities, but in fact was the worst decline this month in New York in the index "22-year history.

Bay Area San Francisco, Las Vegas and Phoenix also continued its dramatic decline. San Francisco has declined by 46% since peaking in 2006 and the index again in mid-2000 levels. Las Vegas officially became the second major area metropolitan areas in the United States to decline by over 50% of the peak (Phoenix past this milestone in February and is now 53% compared to the level peak). Detroit continues its descent into the abyss and prices are now back to 1995 levels (adjusted for inflation are back 1980'ies levels).

A couple of cities are well maintained and effectively managed to increase prices below EEK. In particular, Dallas, Denver and Charlotte were a few tenths of a percent. These were cities, however, have never had a housing boom exorbitant to begin with. Charlotte and Houston never flew very high (price not being "only" had 25-35% more than in 2000 to 2006) so it is less room to fall. In contrast, prices in Phoenix was a good 125% over 6 years. That's why Phoenix is now steaming crater the sub-prime and option-ARM destruction of wealth.

Remarkably enough, the price decline in Los Angeles, Washington, DC and San Diego has been reduced to a crawl, even if those cities are far lower. I have no idea why this is (one can speculate that Washington is a good Case dizziness lobbyists swarm of affairs of the new administration). However, it is likely that these cities are not, and that almost everyone you buy at current price levels will be seated at a loss of one or two years from now. In Los Angeles, for example, prices are still 60% over the year Basic 2000, so there is a long way to fall.

I already predicted that if the City 20-Shiller index is reduced to least 40% peak reached before that correction has run its course now we are down 32% from the peak, so there are another 12% still to go (not 8%, due to the combined effects!).

For those who have read my columns on the market share that you may be wondering how you can comfortably these forecasts. After all, I maintain that if the stock market may not always be effective, history has shown that it is extremely difficult profitable for anyone to predict and speculate on the future direction of prices.

What makes me feel comfortable making statements general guidance on the housing market, however, is that housing prices are what economists call the "correlation series. This principle means that if prices fall last month, designed to fall this month (and vice versa for profit). This is not true the stock market, but there are a number of reasons why it is correct for the real estate market.

A key difference is that stock prices fully reflect the future income stream of a business (something that is very difficult to predict correctly, but the market stock, however, trying to make each day). Unlike a factory or a machine, a home is not a productive asset – do not have products or services and is generally just a shelter.

When housing supply is very high (eg due to Poor economy forces seized) and low demand (adjusted for financing, high degree of uncertainty and high unemployment, etc.) house prices will fall. And once you begin to fall from these macroeconomic factors, which tend to decline for some time (usually several years).

When you add to this that we just had the housing bubble of the most dramatic in American history, and bubbles always pop and prices fall to levels before the bubble, it is difficult to predict that house prices will probably continue to decline well into 2010 (except 2011). Watch The following chart shows the price of Case Shiller home index on 10-City subway and a particular locality (San Francisco). As you can see prices have declined significantly, but the trend is still definitely downward. If you plan to buy the box and keep in mind. You probably have plenty of time to buy before prices stabilize.

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