- Prices are improving steadily but are still at 2006 levels
- A more mature market is less likely to overheat again
- A prudent purchase is more likely to be a wise investment
The latest edition of the Case-Shiller Index reflects a situation in which the score for April 2010 is still way behind the July 2006 peak – in fact, according to that Index at least, America has only just got back to late summer / early autumn 2003 levels.
Here’s a summary of the main findings compared to the 2006 peak:
- 10 City Composite Index: Down just over 33%
- 20 City Composite Index: Down just under 33%
Statisticians love this kind of consistency. It makes them feel good inside, because their numbers add up. Some of the rest of are more skeptical. We all do agree though, that the recovery is going to be slower than we had hoped, and that American property markets are in for a long, hard slog. Some black spots are still on the way down too – prices in Las Vegas, by way of an example, dropped another 8.5% in April.
But, whether the above is a disaster or not depends, of course, on from where one looks at the situation. While property owners, politicians and administrators might be rubbing their hands in woe, others (and I don’t just mean prophets of doom) will be rubbing them in glee. After all, it’s a nice market for bargain hunters – not to mention the flocks of lawyers, foreclosure advisers and other vultures that arrive every morning to pick over the carrion.
Setting rhetoric aside for now, the bottom line is that house prices are not going to rebound, or even improve significantly in the immediate future. Short sighted administrations and aggressive real estate marketers allowed, indeed even encouraged prices to boom above realistic levels. The reality is that the recovery is more likely to track supply and demand, and that lenders holding back on inventory liquidations and short sales need to rethink their business models carefully.
The same logic applies to government inventories too. Almost half of America’s reo homes are sitting on Veteran Affairs, Fannie Mae and Freddie Mac lists. The percentage has been creeping up steadily during the last 6 months and now stands at almost 220,000 or 46% of the total. Even an ostrich with its head in the sand could hardly overlook the current downward pressure on American house prices.
Through all of this, the markets continue to offer good opportunities for property speculators to turn a fair profit. Providing they choose wisely and bid prudently, there is still good demand for well-priced houses in the right part of town. People in that line of business, and own-buyers too, will benefit by viewing the lists of foreclosed property at www.foreclosuredatabank.com.
