I am sure you could have guessed where housing is headed without the Case Shiller report from S&P. According to S&P:
Home Price Indices, the leading measure of U.S. home prices, show further deceleration in the annual growth rates in 13 of the 20 MSAs and the 10- and 20-City Composites compared to the December 2010 report. The 10-City Composite was down 2.0% and the 20-City Composite fell 3.1% from their January 2010 levels. San Diego and Washington D.C. were the only two markets to record positive year-over-year changes. However, San Diego was up a scant 0.1%, while Washington DC posted a healthier +3.6% annual growth rate. These are the only two cities whose annual rates remained positive throughout 2010. Every other MSA has either moved back into or has always been in negative territory during the recent housing crisis. On a monthly basis, Washington DC was the only market where home prices rose in January, but up only 0.1%. The remaining 19 MSAs and both Composites fell during the month, with 12 of the markets and the 20-City Composite down by at least 1.0% versus December 2010.
To show this on a longer scale:
Here are the individual 20 city MSA data:
I understand why Washington, DC is a boom town right now, but it is, to me, a repulsive statistic. High paid bureaucrats, lawyers, and lobbyists love the town.
The government is putting a lot of pressure on banks to work with borrowers but as prices decline, that isn’t a solution. According to CoreLogic:
11.1 million residential properties, or 23.1% of all U.S. homes, were in negative equity at Dec. 31 [Q4], up from 10.8 million, or 22.5%, the prior quarter. The total negative equity held by the nation’s homeowners rose to $751 billion for the fourth quarter from $744 billion at Sept. 30, but down from $800 billion a year earlier. The number of upside down mortgages declined through the first three quarters of 2010, as more properties were foreclosed upon. …
The data analytics firm said another 2.4 million homeowners had less than 5% equity in their property in the fourth quarter, indicating 27.9% of all mortgages are in negative equity or near-negative equity.
CoreLogic said total negative equity is set to rise another 10 points if home prices fall 5% to 10% as projected in 2011.
That means that 13.5 homeowners (27.9%!) are in serious trouble with their homes.
Banks’ REO inventory is now 30x greater than foreclosure sales volume. That won’t help either.
It’s going to be a long haul for housing and there is nothing on the horizon, such as an improving economy, lower unemployment, and climbing wages to stem the flow. There were simply too many homes built during the boom phases at affordability rates that didn’t make sense (malinvestment). Those who can afford to buy a home under the new loan standards will be the ultimate beneficiaries of the bust. But, why rush?
If I thought the end of the price collapse of homes was ending, I would buy the condo I am renting now in Scottsdale. But… why buy if you can rent?
The write off, in my opinion for interest paid is hardly worth the Real Estate Tax and who knows where the equity is going. It is sickening.