While everyone thinks the economy is starting to regain its momentum, the housing market is starting to plunge again.
Reports released this past week show home prices plummeting to an all time low since post-Recession last March. Data indicates that the housing market will continue to face turbulent trending despite the glow of the economy. Home buyer’s tax credit slid down to disappointing figures, reinforcing the possibility of a slow revitalization for the housing market.
According to Standard & Poor’s Case-Shiller Home Price Index, which measures US home prices, the housing market fell 4.2 percent this quarter. Home prices are down to 33 percent from its peak last July 2019. These figures and slow home appreciation are non-reassuring especially with such a fragile economy. In a press statement, David M. Blitzer of Index Committee at S&P Indices said that the downward trend of the housing market is expected to continue and there is no sign of it stopping.
With high unemployment, distress sales, credit problems and foreclosures still on the horizon, the excessive supply of homes continue to throttle the housing market. In contrast with other industries starting on their road to recovery, the housing market is left slumped on the low levels. In fact, home ownership rates are as low as the 2007 levels. Experts are not enthusiastic with the trends and anticipate further decline.
On the brighter side, some regions of the country show promising tracks. Highly urbanized regions such as Washington D.C., Seattle and New York seem to be less affected by the nationwide housing market trends. Home prices in these regions are optimistic, with an increase of at least 1.1 to 4.3 percent over the past year. Although the rate appreciation is very low, it is still quite affirming for our economy. Consumer confidence in these regions is notably higher.
Obviously, home prices are regionalized, with the Southeast and Southwest experiencing the lowest dips and some industrialized Midwestern states, such as Ohio and Michigan, sharing a similar fate. Regions with excessive foreclosures are most heavily affected by the low home prices, while areas less affected have a promising housing market. Luckily, the housing market’s double dipping is not epidemic; there are regions where the affect is relatively small.