No Bottoming Out for Real Estate Market as Home Values Keep Falling
If you’re watching the real estate markets, the good news is that the Federal Reserve has pledged to keep interest rates low through 2014. The bad news is that the market is going to need it. The November Case-Shiller housing numbers, released this morning, indicate that prices tumbled 3.7% from the year before. That’s below expectations of a 3.2% drop.
Even worse, it contradicts a trend in which the rate of price drops had been slowing. For several months, prices had been falling, but by a slightly smaller percentage each month — indicating a bottoming out. This latest data may be an outlier, or it may (horrors!) presage another leg down. (Housing prices are currently 32.9% off their peak).
However, there’s a lot of optimism building in the real estate community, too, so when prices turn, they may turn suddenly. Unemployment claims, for instance, hit nearly a four-year low, while the national jobless rate is at 8.5% — not spectacular by any means but certainly better than the 9% to 10% range we’ve seen in recent years.
Sentiment among homebuilders, meanwhile, hit its highest level in four years, while the National Association of Home Builders Remodeling Index rose last week to a five-year high.
For housing prices, the regional picture did not change, with Washington, D.C., a bright spot for some time, posting year-over-year increases.
Phoenix, meanwhile, is a city to watch. The metro area posted an increase in prices of 0.6% from the previous month. While the market there is still down 3.6% year-over-year, the monthly pop might indicate that sun-seekers are finally biting at bargains of more than 50% off peak prices.
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