Home prices in January remained barely above lows hit during the worst of the recession, according to an index that tracks prices in America's biggest cities, and many analysts said they expected values to fall further as the housing downturn plumbs new depths.
The Standard & Poor's/Case-Shiller index for 20 major U.S. cities, released Tuesday, showed prices dropped 3.1% from January 2010 and 1% from December as demand for homes remained weak and distressed properties — foreclosures and short sales — remained a large part of the market.
"Keeping with the trends set in late 2010, January brings us weakening home prices with no real hope in sight for the near future," said David M. Blitzer, chairman of the index committee at Standard & Poor's. "The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery."
The 20-city index is 1.1% above its low hit in April 2009. A second index, tracking prices in 10 major cities, remained 2.8% above its April 2009 bottom. Many economists expect these widely watched indexes to dip below those previous benchmarks this year, marking a double dip in housing values as defined by Standard & Poor's/Case-Shiller.
And I've only been predicting a housing double-dip for 18 months now (or more correctly that the housing depression never ended in the first place.) The housing market will continue to crash and burn in 2011 and most likely well into 2012 at the very minimum. There are just too many vacant homes and foreclosed properties out there to conduct a healthy market.
And as housing values drop, more and more people are going to be underwater on their homes, meaning they'll face higher mortgage payments, risking mortgage default, and adding to the bonfire of the vanities. There is no political will to deal with this situation right now in Washington either.
We're about to see another significant leg down in the housing market.
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