I have warned against any optimism with respect to housing prices. The Case-Shiller index keeps coming to my rescue. It’s down again.
Note: it’s an average of three months.
There is the usual chatter about buyers entering.
“Relentless” pressure from foreclosures could soon send the S&P Case-Shiller index of home prices to a new low for the past decade, says Stuart Hoffman, chief economist at PNC Financial Services. But he thinks this drop in price and low mortgage rates are getting buyers back into the market.
They never say how many buyers. They never say how many houses are being held off the market by lenders.
The declines came in every city except Phoenix, which is prostrate. Year-to-year, only Washington D.C. (where our tax money goes) and Detroit (the ultimate catastrophe) rose. So, at the top of the money flow and the bottom, things got a little better.
Atlanta fell the most. I am waiting to buy a few investment houses in the Atlanta suburbs, where I live. It’s amazing what you can buy for $100,000.
What other cities fell? Las Vegas, Seattle and Tampa.
The peak was July 2006. Prices nationally are down by a third.
What about consumer confidence? It was down.
When consumers are not confident, they do not buy houses.
Yet the mainstream media still try to fake optimism. Here is the headline from USA Today: Homeownership rates fall to 66% as downturn nears a bottom. There was nothing in the article to indicate a bottom. It says the opposite.
“The trend is down, and there are few, if any, signs in the numbers that a turning point is close at hand,” says David Blitzer, chairman of S&P’s index committee.
(Note: MarketWatch has pulled the article.)
These prices will offer tremendous rates of return on invested capital. The timing in each community will be different.