Should homeowners brace for more financial pain?
Make a wish that the Case-Shiller index isn't a sign that another housing bubble awaits.
So America has recovered from the housing bubble and things are looking better for Real Estate… right?
Not so fast. Marketwatch reports that the most recent Case-Shiller home price index indicates a “not-seasonally adjusted” .2 percent drop for 20 major American cities for December 2009. Prices did rise in a bit of a quick payday for Los Angeles, San Diego, Phoenix and Las Vegas, however. And if you do adjust for the season, prices actually rose .3 percent that month. Perhaps it’s like the math used to depict the actual unemployment percentage in America?
We’re decaying, just not as fast
“The pace of deterioration has stabilized for now,” David Blitzer of Standard & Poor’s tells Marketwatch. “However, the rate of improvement seen during the summer of 2009 has not been sustained.” Over the past year, sources indicate the average national home prices have dropped 2.5 percent.
Home prices decay and so do our budgets
There will always be the obvious connection between a drop in personal wealth and falling home prices. This is because a home is typically the most valuable asset a person has in their financial arsenal. The housing bubble’s bursting put many people in saving mode when the nation needed them to continue spending. Prices, according to the Case-Shiller index, are currently at summer 2003 levels.
That’s good, so long as we aren’t creating another bubble
Joshua Shapiro of MFR Inc. tells Marketwatch we should still be worried. It could be that the homeowner tax credit is propping up the positive signals on the Case-Shiller index. More foreclosures could be on the way. “While much of the impact of the sub-prime disaster on prices at the bottom end of the market may well be behind us, there is likely more pain to come further up the price spectrum,” Shapiro said.
Is Congress creating a new housing bubble?
There are numerous economists who see just such a disaster on the horizon. Quick payday, if artificially induced here, could be a smokescreen. It’s still a good idea to be careful out there when it comes to buying, I think.
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