Residential real-estate prices dropped in November by the most in a year, signaling housing has yet to join the U.S. rebound.
The S&P/Case-Shiller index of home values in 20 cities fell 1.6 percent from November the prior year, the biggest 12-month decrease since December 2009, the group said today in New York. The decline matched the median forecast of economists surveyed by Bloomberg News.
Mounting foreclosures will probably throw more properties on the market this year, further depressing prices, homeowners’ equity and construction.
There has been a lot of debate whether we have been seeing a tepid recovery or a double dip. While the trend and the data suggest the latter, Bloomberg found an analyst with a more palatable explanation for the “tepid” crowd– a “mini double-dip”:
“We’re having what I’d call a mini double-dip in home prices,” Michelle Meyer, senior U.S. economist with Bank of America Merrill Lynch Global Research in New York, said before the report. “Prices will remain pretty weak through the first half of the year. With excess supply on the market, it is still very much a buyers’ market.”
Home sales, as we often point out here, are seasonal. Home sales cool the second half of the year, so if things are “pretty weak” in the first half, we don’t expect any improvement in the second half.
Sadly, one of the side effects of “foreclosure-gate” is likely to be a slowdown in foreclosed properties working their way through the market. This “shadow inventory” of foreclosures will continue to do what it has done for the past few years and depress prices. Now that process has been elongated. Until we see a clear improvement in the economy and the foreclosures have worked through the system, we’ll continue to see a true “double-dip”, not the “mini” variety.