You know the housing market must be rolling over fast when perennial optimist Standard & Poor's is forced to come out and predict a further 7-10% decline in US home prices through 2011. Since S&P has a terrible history of repeatedly underestimating negative events, we may assume home prices can fall much more than 7-10%, at least in real inflation adjusted terms. This must be discouraging to the Communist central planners at the Fed who assumed that record low interest rates combined with money printing would support home prices. Will the free market finally triumph over the Fed? We shall see. Personally, I think we could see a 20% decline in prices when adjusted for inflation over the next 3 years. From
Housing Wire:
Standard & Poor's analysts believe home prices will drop between 7% and 10% through 2011, erasing any improvements prices have recently made.
Home sales, which plummeted after the homebuyer tax credit expired in April have continued to lag. Pending home sales, which preclude existing home sale data, dipped 1.8% in September before the market goes into a winter many expect to be bleaker than usual. With this lack of demand, inventories should grow, according to S&P, while prices drop.
"Low mortgage rates will likely continue to encourage refinancing, but their influence on home buying activities has been limited due to the weak housing market and a lack of demand," S&P credit analyst Erkan Erturk said. Prices will continue to be pressed down as long as the market works through a backlog of distressed properties that remains elevated. Recent foreclosure moratoriums from major lenders because of documentation problems have only delayed this work,
Get Ready For The 2011 Housing Double Dip---S&P
A double could be in the cards.
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