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U.S. house prices still plummeting lower
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TOPIC: U.S. house prices still plummeting lower
U.S. house prices still plummeting lower 2 Years, 7 Months ago Karma: 264
Bloomberg was CHEERING the fact that U.S. house prices "only" fell 3.8% from one year earlier.

Several things need to be said about this absurd propaganda. First of all, the ONLY rational way to analyze asset prices is in REAL DOLLARS (i.e. taking inflation into account). Thus when the propaganda machine talks about house prices falling 3.8%, to that number we essentuially ADD the 10%+ inflation rate - and suddenly in REAL DOLLARS U.S. house price are plummeting lower by approximately 15% per year.

Note that in the Great Depression that house prices fell by roughly 10% per year, but because of DEFLATION the value of the U.S. dollar was increasing. So in REAL DOLLARS the decline in U.S. house prices during the Great Depression was actually rather modest.

Conversely, since the bursting of the U.S. house bubble U.S. house prices have been plummeting lower at about THREE TIMES the rate as occurred during the Great Depression - making this (by far) the worst housing depression in the history of the United States.

And as my recent commentary on the U.S. housing market clearly shows, there is no sign of any end to this collapse...ever.

The U.S. Prison-Cell Economy

"Home Prices in U.S. Cities Fell at Slower Pace in January"

Home prices in 20 U.S. cities dropped at a slower pace in January, pointing to stabilization in the real estate market.

The S&P/Case-Shiller index (SPX) of property values in 20 cities fell 3.8 percent from a year earlier, matching the median forecast of 32 economists surveyed by Bloomberg News, after decreasing 4.1 percent in December, a report from the group showed today in New York. Prices were little changed in January from the prior month, the best performance since July.

Property values are steadying as a strengthening labor market underpins housing demand, which may allow the industry that precipitated the recession to contribute to growth this year. Nonetheless, the recovery in sales may be restrained by foreclosures that are putting more properties onto the market.

“We are starting to see a slightly less-negative picture,” said Sean Incremona, a senior economist at 4Cast Inc. in New York, who correctly projected the decline. “We have seen some slight progress from very depressed levels, but there’s still a long, long way to go.”

Stocks were little changed. The Standard & Poor 500 Index rose 0.1 percent to 1,417.66 at 9:42 a.m. in New York, after yesterday reaching the highest level since 2008.

Home prices adjusted for seasonal variations were little changed in January from the prior month, following a decrease of 0.5 percent in December. Unadjusted prices fell 0.8 percent from the prior month.
Survey Results

Economists’ estimates for the year-over-year change in the home price index for December ranged from declines of 4.5 percent to 3.3 percent, according to the survey. The Case- Shiller index is based on a three-month average, which means the January data were influenced by transactions in November and December.

The December reading was previously reported as a year- over-year drop of 4 percent.

The year-over-year gauge, begun in 2001, provides better indications of trends in prices, the group has said. The panel includes Karl Case and Robert Shiller, the economists who created the index.

Sixteen of the 20 cities in the index showed a year-over- year decline, led by a 15 percent drop in Atlanta. Detroit showed the biggest increase, with prices rising 1.7 percent in January. There were no data available for Charlotte, North Carolina, due to delays in reporting, according to the release.

Eight cities made new post-slump lows, the report said, including Atlanta, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa.
Confidence Improving

Recent reports indicate builder confidence is improving even as sales stabilize. The National Association of Home Builders/Wells Fargo sentiment index in March held at the highest level since June 2007 as the sales outlook climbed for a sixth straight month.

Sales of previously owned houses held in February near an almost two-year high, the real-estate agents’ group reported last week. Purchases dropped 0.9 percent to a 4.59 million annual rate from a revised 4.63 million pace in January that was faster than previously estimated and the highest since May 2010.

Even with the decline last month, January and February sales of existing homes marked the strongest start to a year since 2007.

The number of Americans signing contracts to buy previously owned homes fell 0.5 percent in February to 96.5 after a 2 percent increase the prior month, the National Association of Realtors said yesterday in Washington. January’s reading of 97 was the highest since April 2010.
Bernanke’s View

Federal Reserve Chairman Ben S. Bernanke yesterday said that while he’s encouraged by the decline in unemployment, the central bank still needs to keep interest rates low to make further progress.

Recent “better news” on the economy has also included a “slight bit of encouraging news here and there in the housing market” and strength in manufacturing, Bernanke said in response to audience questions following a speech in Arlington, Virginia.

Home foreclosures remain a concern for builders. Filings fell 8 percent in February, the smallest year-over-year decrease since October 2010, as lenders began working through a backlog of seized properties, RealtyTrac Inc. said this month.
More Foreclosures

“February’s numbers point to a gradually rising foreclosure tide,” Brandon Moore, RealtyTrac’s chief executive officer, said in a statement. “That should result in more states posting annual increases in the coming months.”

Delinquencies are hurting sellers of both new and existing homes.

KB Home (KBH), the Los Angeles-based homebuilder that targets first-time buyers, fell the most in almost nine months after it reported a decline in orders and government data showed new-home sales dropped in February.

“We are seeing signs that the overall housing market is stabilizing and beginning to recover,” Jeffrey Mezger, president and chief executive officer of KB Home, said in a March 23 statement. “The pace of the recovery is uneven, however. We expect that the housing market in general will gradually strengthen as the economy continues to advance.”

Bloomberg Table

1-months 3-months 1-year 2-years 3-years
earlier earlier earlier earlier earlier
US Composite-20 -0.84% -3.26% -3.78% -6.78% -7.43%
Phoenix 0.91% 2.29% 1.28% -7.98% -12.20%
Washington DC 0.69% -1.34% -0.62% 1.58% 4.79%
Miami 0.65% 0.28% -1.92% -6.56% -12.82%
Dallas -0.43% -2.38% -1.20% -3.91% 0.09%
Boston -0.44% -3.16% -2.83% -3.35% -1.88%
Las Vegas -0.51% -2.28% -9.05% -13.07% -28.19%
Denver -0.57% -1.96% 0.15% -2.13% 0.48%
Seattle -0.73% -3.12% -3.97% -10.38% -15.77%
Tampa -0.75% -1.99% -3.79% -10.16% -16.83%
1-months 3-months 1-year 2-years 3-years
earlier earlier earlier earlier earlier
New York -0.80% -3.66% -2.87% -5.97% -10.93%
Los Angeles -0.83% -2.87% -5.37% -7.06% -3.48%
Minneapolis -0.84% -2.60% -1.80% -9.09% -7.47%
San Diego -1.12% -2.70% -5.28% -5.23% 0.32%
Detroit -1.12% -5.49% 1.74% -4.22% -11.18%
Chicago -1.89% -7.08% -6.59% -13.56% -17.35%
Cleveland -2.03% -3.88% -3.33% -7.22% -6.86%
Atlanta -2.07% -6.27% -14.79% -20.13% -21.88%
Portland -2.11% -4.05% -4.30% -11.77% -15.50%
San Francisco -2.52% -5.19% -5.92% -7.49% 0.86%
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