Plummeting Prices Deepen Crisis in U.S. Housing Market
Posted on May 30, 2011
According to at least some sources, certain sectors of the American economy are showing signs of life, but the housing market sure isn’t one of them, especially considering the news expected to surface Tuesday that prices have now dipped below the previous lowest point recorded since this recession kicked in three years ago. The recession’s earlier bottom for housing prices occurred in 2009. —KA
The New York Times:
Even as the economy began to fitfully recover in the last year, the percentage of homeowners dropped sharply, to 66.4 percent, from a peak of 69.2 percent in 2004. The ownership rate is now back to the level of 1998, and some housing experts say it could decline to the level of the 1980s or even earlier.
Disenchantment with real estate is bound to swell further on Tuesday when the most widely watched housing index is all but guaranteed to show that prices of existing homes sank in March below the lows reached two years ago — until now the bottom of the housing crash. In February, the Standard & Poor’s/Case-Shiller index of 20 large cities slumped for the seventh month in a row.
Housing is locked in a downward spiral, industry analysts say, not only because so many people are blocked from the market — being unemployed, in foreclosure or trapped in homes that are worth less than the mortgage — but because even those who are solvent are opting out.