Again, falling home prices consistent with year old recession
By: Myles, December 29th, 2008
A report on Home Prices expected out Tuesday, December 30, 2008, is likely to prompt the push for additional relief for the housing sector.
The S&P/Case-Shiller index of home prices is expected to reflect the continuing toll exacted by the deflating housing bubble. Along these lines, here is a rather remarkable list of factors — all errupting within the last 12 months — which have contributed to our year-old recession:
- Plunging home prices;
- Foreclosures;
- Tight credit,
- Soaring unemployment;
- Tumbling exports;
- Sinking home values are straining the balance sheets of banks that hold mortgages or mortgage-related assets.
Credit markets and the overall economy are unlikely to recover fully until home prices hit bottom. Some numbers to substantiate the worry:
- In the most recent report, for September 2008, the Case-Shiller 20-city composite home-price index fell 17.4% from a year earlier and 1.8% from the previous month.
- J.P. Morgan estimates that the October 2008 year-over-year drop will be 18.2% and the monthly decline from September will be 2.2%.
- A report last week on home prices by the Federal Housing Finance Agency (FHFA) cut a gloomy swath for the Case-Shiller data. The FHFA said October 2008 home prices nationwide were down 7.5% from a year earlier and 1.1% from September 2008.
- The Case-Shiller index includes homes financed by a broader range of mortgages than the FHFA measure, which is based only on homes financed through government-backed mortgage giants Fannie Mae and Freddie Mac.
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