Ho hum….another month…. another record decline in home prices.
Here’s the latest gloomy housing news from the Case-Shiller Home Price Index
As expected, the carnage goes on.
From Bloomberg by Timothy R. Homan and Courtney Schlisserman entitled: Housing Prices in 20 U.S. Cities Fall by a Record 18.5%
“Home prices in 20 U.S. cities declined 18.5 percent in December from a year earlier, the fastest drop on record, as foreclosures climbed and sales sank.
The decrease in the S&P/Case-Shiller index was more than forecast and followed an 18.2 percent drop in November. The gauge has fallen every month since January 2007, and year-over-year records began in 2001. Separately, the Federal Housing Finance Board said prices in 2008 fell a record 8.2 percent.
Record foreclosures are contributing to declining property values and household wealth, crippling the consumer spending that makes up about 70 percent of the economy. The Obama administration has pledged to spend $275 billion to help stabilize the housing market, including $75 billion to bring down mortgage rates and encourage loan modifications.
“The massive inventory overhang in the market and the surge in foreclosures mean prices will continue to fall rapidly,” Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York, said today in a note to clients. “The administration’s rescue plan will, in time, slow the rate of decline, but it won’t happen immediately.”
Economists forecast the 20-city index would fall 18.3 percent from a year earlier, according to the median of 28 estimates in a Bloomberg News survey. Projections ranged from declines of 17.4 percent to 19 percent.
Compared with a year earlier, all areas in the 20-city survey showed a decrease in prices in December, led by a 34 percent drop in Phoenix, a 33 percent slide in Las Vegas and a 31 percent decline in San Francisco.”
By the way….
Don’t think for a moment that the government can do anything to stop this slide because the truth is they can’t.
Instead, all they can do is keep talking about it which something of their specialty.
In fact, one politician after another has grabbed a hold of this one and just won’t it let go.
The problem is that every one of their “solutions” to this “crisis” involves a bailout of some sort.
That means that in order to save the day, our politicians have decided that it is perfectly okay to require responsible Americans to pay for the monumental idiocy people who bought homes that they knew they never could afford.
That to me is an absolute outrage and an affront to the 62 million households that are either paying their mortgages on time or own their own homes outright.
That’s not to mention the 35 million renters that refused to participate in this orgy.
So forgive me when I get more than a little irritated by all of this talk of bailing out the very folks whose greed created this gigantic mess in the first place.
Greed after all is has its price—or at least it was supposed to before our politicians decided that it was just fine to socialize the losses of other people on the backs of the rest of us.
But here’s what really gets me about all of this bailout talk.
Every bit of it is really designed to prop up home prices at levels the market has clearly proven are unsustainable—no matter how low interest rates may be.
And while our politicians frame all of this talk in their usual “I’m for the little guy” spiel, propping up home prices is really about helping the big banks cut their losses instead.
The bigger problem though, is that no matter how much money they feel they may need to grab from me in order to help their banker friends, all of their attempts to “do something” will ultimately fail.
That’s because the truth is as simple now as it was before the bubble: Home prices and incomes go hand in hand.
And until home prices actually fall to the point where a buyer can afford one using a sane mortgage product, the decline in home prices cannot be possibly stopped—or avoided.
But that bit of logic won’t be enough to stop our politicians from “doing something”, even if it means punishing innocent first time buyers all along the way.
Because lets face it, you can’t possibly be for both affordable housing and propping up home prices at the same time.
That is, unless of course, you are a politician.
Talking out of both sides their mouths is as natural to them as putting their hands in our wallets.
They irk me to no end.
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