Home Prices Near 10-Year Low

The Case-Shiller report shows that home prices are the lowest they’ve been since early 2003.

Year-to-year, unadjusted January prices declined 3.9% for the 10 major markets while the 20-city index dropped 3.8%. The latest year-to-year drop represented a marginal improvement over the 4.1% decline reported last year for both indexes. Just three cities reported annual growth. Denver home prices edged up 0.2%. Detroit and Phoenix–two cities that have seen massive price declines in recent years–reported year-to-year increases of 1.7% and 1.3%, respectively. Atlanta again posted the biggest drop–at nearly 15% year-to-year.

BTW, here’s an article from early 2003 warning us that there’s no housing bubble:

But people have been wondering about a “housing bubble” since early 2001, and it hasn’t popped yet.

For one thing, housing, like politics, is always local. There are some parts of the country — Sacramento, we’re looking at you — where bubbles seem to have formed, with prices rising higher than the market apparently can support.

But on a national level, economists believe the supply of available housing is low enough to keep demand strong and keep prices from falling suddenly.

“1.85 million new homes being built per year in a population of 290 million and growing doesn’t seem to be outrageous,” Robertson said.

Economists warn that the housing market should slow down when interest rates start to rise, but that’s not expected to happen for quite some time — not until the situation in Iraq is cleared up, at the very earliest.

And the only thing that’s going to bring interest rates up significantly in the short term is stronger economic activity, anyway, which will offset a good bit of the damage to the housing sector.

“If we’re in a situation where rates are higher because the economy’s great, the housing market is going to be last thing I’ll be worried about,” said Brown Brothers Harriman economist Lara Rhame, a former Fed economist.

For the most part, economists expect a gradual slowdown in the housing market through 2003 — the National Association of Realtors, for example, thinks home-price growth will slow to 3.0 percent by the fourth quarter.

Posted by on March 27th, 2012 at 10:31 am


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