March housing update, Phoenix metro area
- The Case-Shiller housing index published 2/22/11 shows that Phoenix pricing dropped 1.7% in December as compared to one year earlier, and is down a total of 8.3% year over year.
- In WSJ’s Home Prices Slide Despite Recovery we’re told that nationally there are 850,000 too many homes on the market, that sales are dominated by distress sales including those that have gone back to the lender, and that nationally we are at risk of another 15-20% pricing decline. However, the article also states that many economists say only another 5% decline is likely and that the housing market will stablize as economic growth does.
- Are Home Price Declines Overstated? (Wall Street Journal, 2/22/11) – the writer makes a case that pricing indexes are over gloomy because they measure repeat sales of same houses. Since the majority of sales are distressed, deflation may be exaggerated. In fact “The more foreclosures there are in the Case-Shiller index, the more it falls, and … has nothing to do with underlying prices in the market, period.”
- Warren Buffet predicts the housing market to begin recovery within a year, predicated on available and affordable mortgage products.
- “Our country’s social goal should not be to put families into the house of their dreams, but rather to put them into a house they can afford.” (Warren Buffet)