National Home Prices Double Dip

The reality is that houses are just seeking a more realistic price range.

for the past twenty years I could have built a new house for one third what my house was worth. That just did not make any sense. In the future if house prices fall another 25 percent, houses will cost what it actually costs to build them brand new. That would be fair for all concerned, except for the people who bought at the outrageous prices.
 
Why complaining for? A house isn't an ATM or an investment. It's a place to live. It's this phony wealth effect that's retarded. I am in Australia where average prices are now $500,000+ for crap homes. It's speculators and idiots like the investors over there who have driven up the prices. They're starting to crash here, and it's a good thing.
 
Home prices to become more affordable...
:confused:
Housing expert sees another price plunge
June 9, 2011: In an off-hand remark before cameras and microphones, economist and housing market guru Robert Shiller opined earlier this year that he would not be shocked if there was another 10% to 25% in the nation's home price plunge -- and he's not backing down from that statement.
At a S&P Housing Summit in New York, Shiller on Thursday reiterated his fears of falling home prices. It's not a forecast, he said, just a comment on his understanding of housing market trends.

He explained that speculative markets, like stocks or commodities, act like random walks. They go up and down all the time. Housing market direction tends to be more consistent. "I worry that this is a real and continuing downturn, like in Japan," Shiller said. "It had a boom in the 1980s that peaked in 1991. Prices declined in the major cities for 15 straight years after that."

The U.S. housing market is hard to predict because the boom and bust it went through was unique. Shiller has studied historical price data back to the 1890s and found nothing like it. "This is the biggest housing boom and bust in U.S. history," he said. "The bubble was unique. "That makes it impossible for statisticians to forecast because they deal with things that repeat themselves. You see a pattern and expect it to repeat."

It's even different from the Great Depression, when the home price plunge was at about the same rate. The big difference, however, was that prices of nearly everything else cratered in the 1930s as well -- which has not been true during the housing bust.

Source

See also:

America's lost trillions
June 9, 2011 - Household wealth has only recovered about half the $16.4 trillion lost in the Great Recession.
One reason that the U.S. economy still struggles to achieve sustained growth is that Americans are a long way from recovering the trillions of dollars of household wealth lost during the Great Recession. U.S. household wealth fell by about $16.4 trillion of net worth from its peak in spring 2007, about six months before the start of the recession, to when things hit bottom in the first quarter of 2009, according to figures from the Federal Reserve. While a rebound in the stock market, an improved savings rate and consumer steps to reduce debt resulted in net worth gains since 2009, only a little more than half of that lost wealth - $8.7 trillion -- is back on household balance sheets.

That leaves American household wealth $7.7 trillion less than it was before the recession. "The huge loss of consumption is due to loss of $8 trillion in bubble wealth," said Dean Baker, co-director of Center for Economic and Policy Research. The gap that remains in household wealth is in stark contrast to the nation's gross national product, the broadest measure of economic activity, which has recovered all of the lost output of the recession. And the wealth gap helps to explain why consumers are still so reluctant to spend a full two years after the official end of the recession.

Much of the lost household wealth came from declines in the value of real estate, which dropped $6 trillion, or nearly 30% of its value, from the end of 2006 to the end of last year. And after posting modest gains in 2009 and the first half of 2010, the value of homes started to fall again in mid-2010. The most recent figures from the Fed, released Thursday, showed real estate lost another $339 billion in value in the first quarter. That was partly offset by a $68 billion decline in the total owed on mortgages, the main driver of a $74 billion reduction in overall liabilities.

The stock market, which has come off its peaks recently, helped households by adding $885 billion in the value of stocks and mutual funds during the quarter. Overall net worth increased by $943 billion in the quarter. Experts say the loss of wealth has been a transformative event for most Americans, changing their attitudes on spending, saving and the value of owning a home rather than renting.

MORE
 

New Topics

Forum List

Back
Top