“Another weak report; weaker than last month. The national index is down 1.5% from the third quarter of last year and 15 of 20 cities are down over the last 12 months. Other than Tampa, FL, there are no new lows this month but many analysts will argue that a double dip will be confirmed before Spring. While some of the bad numbers may reflect the end of the government’s tax incentive for first time homebuyers, there are other problems weighing on the housing market.” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. “The national economy is certainly the number one issue for housing. Additionally, there is a large supply of houses on the market and further, hidden, supply due to delinquent mortgages, pending foreclosures or vacant homes. New construction is running at less than half the pace needed to meet normal demand, so a sustained recovery could be a ways off.”click chart for larger image
Note: Case Shiller uses a three-month weighted average for calculating prices (July, August, September), which means it is very slow in detecting rapid price movements.
If you look at the individual city numbers, you get a good sense of where the price declined occurred. The top five losers were: Cleavland down 3%, Minneapolis -2.1%, Portland -1.9%, Dallas -1.6%, and Phoenix -1.5%.
There were only 2 areas which saw price gains: Las Vegas +0.1% (unbelievable) and Washington +0.3%.
Regarding the housing market, it is safe to conclude the housing dip has arrived. It will be interesting if we get more housing related stimulus from the government. After all, one of the most powerful lobbyists in Washington is the National Association of Realtors which is always trying to steal money from taxpayers to boost their bottom lines. Maybe they could suggest another pointless home buyer's tax credit since it certainly juiced the housing market for about 9 months or so. These people have no shame because it is not their money at stake. As I have said before, the best thing for the housing market would be to let it fall until buyers come back into the market on their own. Housing is still overpriced, and there is little the government can do about that. The Fed, however is doing its best to debase the dollar to artificially increase nominal home prices, but that does not seem to be going too well.
Home Prices Fall 2.8% Year Over Year in September--Corelogic
Get Ready For The 2011 Housing Double Dip---S&P
US Housing Market Reaches Depression-Era Milestone
Home Prices Decline 1.6% In October--Altos Research