US Home Values Down 33% Since 2006 Peak
According to Case-Shiller, the slump in the US housing market is now officially more severe than the one experienced during the Great Depression.
According to the S+P/Case-Shiller home price indices, US home prices have dropped 33% since the start of the housing crisis in the summer of 2006. This compares to a decline of 31% in the late '20s and early '30s (Great Depression).
The top in the US housing market was experienced exactly five years ago (June of 2006). Cracks started to appear in the subprime mortgage market shortly after that, and the rest, as they say, is history. The implosion of the US housing market sparked a crisis on Wall Street that ended up costing US taxpayers trillions of dollars. The effects of the US housing crisis (and the resulting measures taken to stabilize the global economy) will continued to be felt long into the future.
According to Case-Shiller, the US housing market officially experienced a "double dip" during the first quarter of this year. The firm has said that they expect US home prices to drop by 5% in 2011.
A glut of foreclosures and tighter credit standards have been two of the major culprits behind the continued weakness in the US real estate market. Many willing buyers who are able to obtain financing are afraid to buy, as they (rightly) feel that home prices will just continue to drop and they will be able to get a better deal next year.
In addition, a high national unemployment rate and a surge in "underwater" mortgages have also helped to sink the real estate market. Many people are stuck in their homes and are unable to move, due to the fact that they owe more on their home than what it is worth. Even if people are able to find better jobs elsewhere in the country, many are unable to move due to their current mortgage situations.
Many industry analysts believe that more pain is ahead for the US real estate market, and it's really hard to argue with them at this point. The real question is - when will US home values finally start to stabilize and move higher?
Source: S+P/Case-Shiller Home Price Indices
Filed under: Real Estate News