The nation’s housing recovery is losing momentum, posting a string of small monthly declines that could signal a dreaded double dip. The approaching expiration of the homebuyer credit that had spurred demand, will challenge recovery and possibly send prices down another 5% or more. See the following article from Property Wire for more on this.
Residential property prices in the US fell in January amid fears of a double dip recession that will impact on the real estate market, according to the latest index to be published.
Although the prices drop is relatively small at 0.7%, overall mixed results underscore the threat of a double dip, says the Standard & Poor’s Case-Shiller US National Home Price Index.
The 10 city index showed no change from January but the 20 city index declined 0.7% seasonally unadjusted declines and back to their autumn 2003 levels
The average home prices are now at similar levels seen in the autumn of 2003. The 10 city composite fell 33.5% and the 20 city composite fell 32.6% from the peak in June and July 2006 to the April 2009 trough. The peak to date differences through January 2010 are -30.2% and -29.6% respectively.
‘While we continue to see improvements in the year-over-year data for all 20 cities, the rebound in housing prices seen last fall is fading,’ said David Blitzer, managing director and chairman of the S&P Index Committee. ‘Fewer cities experienced month-to-month gains in January than in December 2009, on both a seasonally adjusted and unadjusted basis,’ he added.
Paul Dales, the US economist at Toronto-based Capital Economics, said that although house prices on the 20 city composite have yet to reverse recent increases, ‘it is only a matter of time before the index records a double dip in prices, much like that already seen on the alternative Federal Housing Finance Agency measure’.
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Dales pointed out the 0.4% monthly decline in the seasonally unadjusted 20 city composite index from December 2009 was the fourth fall in as many months. But a ‘normal softness’ in the market meant seasonally adjusted prices rose 0.3% in the same time, the eighth increase in as many months.
‘This run-up in prices primarily reflects the increase in sales generated by the first time homebuyer tax credit towards the end of last year, which reduced the excess supply,’ he explained.
‘The real test for the market will therefore come when the tax credit expires at the end of June. At that point, we think that demand will fall back and foreclosures will continue to boost supply. Such a toxic combination will push prices lower again,’ he added.
Capital Economics projects prices on the Case-Shiller measure to fall back by at least 5%, undermining the still fragile household sector as well as the strength and sustainability of the overall economic recovery seen so far. Residential property prices in the US fell in January amid fears of a double dip recession that will impact on the real estate market, according to the latest index to be published.
Although the prices drop is relatively small at 0.7%, overall mixed results underscore the threat of a double dip, says the Standard & Poor’s Case-Shiller US National Home Price Index.
The 10 city index showed no change from January but the 20 city index declined 0.7% seasonally unadjusted declines and back to their autumn 2003 levels
The average home prices are now at similar levels seen in the autumn of 2003. The 10 city composite fell 33.5% and the 20 city composite fell 32.6% from the peak in June and July 2006 to the April 2009 trough. The peak to date differences through January 2010 are -30.2% and -29.6% respectively.
‘While we continue to see improvements in the year-over-year data for all 20 cities, the rebound in housing prices seen last fall is fading,’ said David Blitzer, managing director and chairman of the S&P Index Committee. ‘Fewer cities experienced month-to-month gains in January than in December 2009, on both a seasonally adjusted and unadjusted basis,’ he added.
Paul Dales, the US economist at Toronto-based Capital Economics, said that although house prices on the 20 city composite have yet to reverse recent increases, ‘it is only a matter of time before the index records a double dip in prices, much like that already seen on the alternative Federal Housing Finance Agency measure’.
Dales pointed out the 0.4% monthly decline in the seasonally unadjusted 20 city composite index from December 2009 was the fourth fall in as many months. But a ‘normal softness’ in the market meant seasonally adjusted prices rose 0.3% in the same time, the eighth increase in as many months.
‘This run-up in prices primarily reflects the increase in sales generated by the first time homebuyer tax credit towards the end of last year, which reduced the excess supply,’ he explained.
‘The real test for the market will therefore come when the tax credit expires at the end of June. At that point, we think that demand will fall back and foreclosures will continue to boost supply. Such a toxic combination will push prices lower again,’ he added.
Capital Economics projects prices on the Case-Shiller measure to fall back by at least 5%, undermining the still fragile household sector as well as the strength and sustainability of the overall economic recovery seen so far.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.
