We have talked about the United States real estate market falling into a double dip recession for the past couple of years. We have worried about it, heck most agents and brokerages have had the night sweats over it.
Well folks, it is here.
From October to November, prices fell in 19 of the 20 metro areas tracked by the Standard & Poor’s/Case-Shiller index, widely considered a gauge of the housing market’s health. The only exception was San Diego, where prices were basically unchanged.
Only four areas posted year-over-year gains in November, including Los Angeles, San Diego, San Francisco and the Washington region. But in the aggregate, prices dipped 1.6 percent in November from the same time a year earlier, falling in 16 cities.
The nine cities that hit their lowest annual levels since the housing bust started were Atlanta, Charlotte, Chicago, Detroit, Las Vegas, Miami, Portland, Ore., Seattle and Tampa. via the Washington Post
The biggest problem isn’t the prices dropping, that is the symptom. The biggest problem is that consumers will lose their confidence in the housing market.
That will be brutal. We gave billions of our tax dollars to home buyers and sellers to try to reassure them that housing was a good choice for their investment dollars. Even while mortgages were getting harder to get, buyers were coming into the market due to the low interest rates. Now it seems like they are willing to sit it out and watch.
Sure homes will get sold, but it is a question of velocity. For a market to work the velocity and confidence need to be there. Let’s hope that this downturn is short lived and the buyers return.
No related posts.
{ 8 comments… read them below or add one }
You've been calling this one for a while and here it is. Let's hope the double dip is enough and we'll pull out.
I don't think for one minute that consumers will lose their confidence.
There is no better place to buyer real estate than in the states!
Can you blame them for wanting to be overly cautious? Many people are still smarting from the collapse of the housing bubble. Based on that there are many of perceived reasons to be weary of buying. I think these numbers are not a symptom so much as a casualty of a terrible market supported by an overall fear of homeownership.
The housing market is a great, regardless, and no one should be losing their confidence in it. Yes, we had the recession and the double dip, but if you wait it out, you can get that great return. People will always need a home/mortgage and consumers cant deny that. It's a buyers market now and not enough people understand that.
The housing market has historically had its ups and downs and those savy investors that have been patient and not chased deals during the boom times have had incredible opportunites to get rich in the down markets. There will always be opportunites in the market for the wise investor. If there is a double dip that will just create more opportunties for buyers who have patiently waited.
Securities laws also work to protect private lenders, so you must disclose to them
what the potential downsides are. These might include how long it will take to sell a
property; mortgage rate changes, housing market pricing fluctuations, or the cost of
rehabbing a property. There are others you’ll want to mention
One of the main reasons for the real estate double dip is that he majority of owners and potential owners are pessimistic about any real increase in home prices over the next five years; many are of the view that the effective purchasing power of equity congealed in a residence will actually decline over the next decade, compared with other real stores of value. So this symptom is surely a serious matter to be considered.
Many say it will get worse in 2012. As for me their are places I want to buy even if it get worse, because these places are now lower than my rent. But I don’t think it will get as bad as the dooms day people say it won’t go to 1982 prices. More like 1990′s in my area (Chicago). Because when it hits 50 – 60 K for one bedroom condos and and 75 – 100 K for two bedroom the properties immediately become profitable rentals if in good condition or if work is minimal. Many places are that low now, and more will follow and investors just wait for the deal. If you are not an investor I say buy when the rental potential is halfway their so you don’t compete with the vultures. I am looking at a condo now. It needs to drop another 25K to make it a profitable rental, so I will ask 10 – 15K off. And their are multiple alternatives so I won’t worry.