Housing: The 6-Year Bust
Case Shiller 20-city composite, not seasonally adjusted NPR hide caption
U.S. home prices hit a new, post-bubble low at the end of last year, according to today's Case Shiller numbers. A few noteworthy details:
The housing bust is now nearly six years old. Understandable, perhaps, given the size of the bubble and the endless, painful slog through millions of foreclosures. Still, six years is a long time.
There are still millions more foreclosures to go. There could be 1 million foreclosures this year, and another million next year, according to RealtyTrac, a company that studies this sort of thing. In a normal year, there are fewer than 500,000 foreclosures.
There is no longer a glut of homes for sale. Since the start housing bust, there has been a glut of homes on the market — supply was too high relative to demand. This has been one of the factors pushing prices down. But the latest data show the relationship between supply and demand swinging back to normal, as sales increase and fewer new homes are built.
Home prices may soon stabilize. This note, from Ian Shepherdson of High Frequency Economics, is along the lines of what many analysts are saying:
the recent increase in sales ought to stop prices falling by the late winter/early spring. With payrolls rising much more quickly ... stability in home prices will likely persuade more potential buyers that it is now worth getting into the market.