Looking at the trend lines isn’t enough any more to determine the future of the housing market. Too many factors have disrupted historical trends. Still, for the short term, some trends are easier to follow. When Inman News says they expect a 5%-10% price decline in 2011, they have some solid reasoning behind it.
For most metro areas, home prices peaked some time in 2006 and except for a few minor bumps, it’s been all downhill ever since. 2010 has been no exception. So, if we tally up all the annual sales data since 2006, it’s been a four-year run of bad news regarding the direction of housing values.
Enough is enough, you say, and we should begin 2011 with renewed optimism and vigor. I got your back there, but it’s a weak defense, because intersecting trend lines, including an unexpected, but very strong post-tax credit slump and a shadow inventory problem will keep housing prices heading in the same direction — down. Expect another 5 percent to 10 percent decline in housing prices in 2011.
Standard & Poor’s credit analyst Erkan Erturk tries to stay optimistic when it comes to reporting about the housing market. “Looking at where we are today as compared to the days of 2008 through mid-2009 when home-price indices (S&P/Case-Shiller) were showing over 10 percent declines on a 12-month basis, the market has, indeed, stabilized, even improved,” Erturk reported.
However, that stabilization doesn’t diminish the fact that Standard & Poor’s analysts predict home prices will decline another 7-10 percent in 2011.
The good news, Erturk stressed, is that declines have decelerated. The bad news is, the timeline for declines continues to stretch out into the future.
The whole article is worth a read.
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Shocker! Lets see, if the interest deduction goes away and with millions of empty homes on the market and unemployment approaching 10% i’d say you didn’t go out on much of limb to make that prediction. Closer to 15%.
I’m trying to figure out what houses are really worth right now. cyberhomes.com seems to have removed their prices. They used to have home prices that were somewhat realistic. Zillow.com is always inflated. Areas where there are no sales are increasing in value. There are no comps to substantiate the increase. Very suspicious. Keep your eyes open.
John B.-
The big question for me is not what homes are worth now, but what they will be worth in a year or two. I’ve seen too many people purchase homes thinking they got a bargain because prices are down 25% or so “and surely couldn’t fall much lower”. When supply is high and demand is low, prices are going to fall, and any offer on a home should reflect that.
Mick-
I wouldn’t be surprised if you are right about the 15%. It appears that the government has given up on trying to support prices through tax credits, etc., and maybe, maybe, prices will be allowed to fall to where natural forces should put them.