U.S. home prices slide into 'double dip'

[somone]

http://www.latimes.com/entertainment/news/music/la-fi-double-dip-20110126,0,4931371.story

U.S. home prices slide into 'double dip'
After rebounding last year with help from tax incentives, home sale prices fell in November — the fourth month-to-month decline in a row — according to the Case-Shiller Index.
By Alejandro Lazo, Los Angeles Times

A "double dip" in home prices appears to be underway in the nation's biggest cities, jeopardizing the tepid U.S. economic recovery.

The widely followed Standard & Poor's/Case-Shiller Index, which tracks the real estate market in 20 major U.S. cities, showed that prices dropped 1.6% in November from the same month a year earlier, the second consecutive year-over-year decline. What's more, the index fell 1% in November from October, marking the fourth consecutive monthly decline.

Last year, a recovery in housing prices seemed to be on track. But analysts now say that that improvement was juiced by home-buying tax credits that have now expired. In addition, unemployment has remained stubbornly high and millions of Americans are still at risk of foreclosure.

A second slide in home prices would act as a drag on the economic recovery — and stand in sharp contrast to other downturns. During the real estate crash of the 1990s, for example, prices slowly but steadily improved from their bottoms. "It is going to be a rocky bottom, where we bounce around," said Stan Humphries, chief economist at Zillow.com, a real estate information site. And, after that, "it is likely that real estate appreciation won't keep up with inflation."...

[DCBob]

1. What is compounding this problem is the massive "shadow inventory" of foreclosures..

The "shadow" inventory -- the backlog of homes lost or soon to be seized through foreclosure but not yet for sale -- has grown astronomically, to a 44-month backlog. Here's what that means:

At the current pace, it'll take at least three years to sell all those houses and condos when they eventually go on the market -- if buyers can be found and if the homes are still in saleable condition. It also means three more years of uncertainty for all of us:

•Three years of suppressed -- and depressed -- housing prices.
•Three years more to wait before you can put your home on the market without competing with abandoned, run-down foreclosures. (These days foreclosures are a quarter of home sales, nationally.)
•Three years of limbo for defaulting homeowners whose banks start foreclosing, then fail to follow through. (This MarketWatch story illustrates the consequences for one homeowner.)

http://money.msn.com/saving-money-tips/post.aspx?post=c28af358-1032-4e6a-9ce7-63ea29fb5da7

The good news is that the foreclosure rate has at least slowed. Also, this may be good news to first time home buyers who could not afford homes before but might be able to now with prices so low.

[customerserviceguy]

6. And the 'double' part of the dip

is caused by trying to do CPR on the housing market with the goofy buyers credit. We don't get out of this recession until real estate prices hit rock bottom, and that doesn't happen until housing is finally priced at its proper market value. Artificially giving tax breaks and slowing the pace of foreclosures (that really involve truly defaulting borrowers) is just prolonging the agony.

[Mojorabbit]

7. and this

I just don't see how people will be able to refinance if their home is now underwater

[somone]

8. Scary indeed

Yep, it's coming

[babsbunny]

2. yep

[earthside]

3. But the Dow!!!

But the DJIA is almost at 12,000!

[tularetom]

4. But they aren't making anymore land!

How many times did we all hear that over the past 25 years when somebody was trying to get us to invest in real estate.

[OhioChick]

5. No job = No new home n/t