The never-ending housing bust continues today with the latest Case-Shiller report, which says home prices fell 3.1 percent in the year through January.
Prices fell in 18 out of the 20 metro areas tracked by the index (DC and San Diego were the two exceptions), and 11 areas hit new post-bubble lows.
A single, grim sentence from the report sums up the outlook:
January brings us weakening home prices with no real hope in sight for the near future.
No real hope in sight for the near future — despite the fact that it's been five years now since the housing market peaked.
The persistence of the bust is a reminder of just how different a housing bubble is from other bubbles.
Take a look at these two graphs. The first shows the U.S. stock market (as measured by the S&P 500) since 2000. The second shows the U.S. housing market over the same time period.
In the stock market graph, you see the market fall as a result of the dot com bust — then you see it bounce back. It falls again during the financial crisis — then it bounces back again.
When a stock bubble pops, there's a lot of panic selling. Prices fall quickly. That allows the market to clear, reset and start climbing again.
Housing is a different story.
For one thing, a much bigger chunk of the housing market is funded with borrowed money. So the popping of a housing bubble is especially likely to spread through the financial system that made all the bad loans that fueled the bubble.
For another thing, when a housing bubble pops, you wind up with lots of people who live in houses that they can't afford. Resolving that problem is a long, painful process — as we're learning right now.