RE and economic charts: Case-Shiller: U.S. Home Prices Keep Weakening as Eight Cities Reach New Lows in November + House Prices and Months-of-Supply, and Real House Prices

Tuesday, January 25, 2011

Case-Shiller: U.S. Home Prices Keep Weakening as Eight Cities Reach New Lows in November + House Prices and Months-of-Supply, and Real House Prices

[mEDITate-OR:
think that unemployment numbers tell U.S. all we need to know about home prices...
and then Like Ed McMahon, wonder why you are wrong, again, Komodo Dragon breath...

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When you compare Detroit, we see unemployment is getting much better, but home prices are getting much worse - very different.
When you compare Las Vegas & Phoenix, we see Nevada getting worse both ways, but while Phoenix's employment is stabilizing, home prices are still dropping a lot.
When we compare Atlanta, Seattle & Portland..., tis, not just, simply ugly.
When we compare Frisco, LA and Diego, we see stable home prices for almost two years, but the 2nd worst unemployment in the U.S. - not getting much better.
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"eight markets – Atlanta, Charlotte, Detroit, Las Vegas, Miami, Portland (OR), Seattle and Tampa – hit their lowest levels since home prices peaked in 2006 and 2007".
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A few key points:
• The real price indexes are at post-bubble lows. Those who argued prices bottomed some time ago are already wrong in real terms, and will probably be wrong in nominal terms soon.

• Don't expect real prices to fall to '98 levels. In many areas - if the population is increasing - house prices increase slightly faster than inflation over time, so there is an upward slope in real prices.

• Real prices are still too high, but they are much closer to the eventual bottom than the top in 2005. This isn't like in 2005 when prices were way out of the normal range.

• Prices will probably fall some more and my forecast is for a decline of 5% to 10% from the October 2010 levels for the national price indexes. We will need to watch inventory (and months-of-supply) closely over the next few months to forecast house prices.

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Case-Shiller Price Declines