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Home prices fall; eight cities hit new lows
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Kai Ryssdal: While the President will focus on jobs in his speech, we'll do housing first on the program today. Mostly 'cause it's an actual economic indicator that we're working with.
Home prices fell in November. That's the national headline from the S&P/Case-Shiller index that came out this morning. In a number of big cities, prices have dropped to their lowest levels since the worst of the housing bust.
From Washington, Marketplace's David Gura reports.
David Gura: The latest Case-Shiller index did have some good news. Home prices in Washington, D.C., and three California cities were higher in November than they were the year before. But overall, prices fell for the fifth straight month.
Susan Wachter teaches at Wharton. She says a big problem is high unemployment.
Susan Wachter: That's the tale of the whole housing market. When jobs recover, so will the housing market.
Also holding down prices is what she calls "excess inventory," otherwise known as unsold foreclosed homes.
Wachter: We have to work our way through them, and that will take time.
Some analysts are worried all this could lead to a dreaded "double dip." That would happen if home prices fall below their previous low, set in April 2009.
David Blitzer oversees the Case-Shiller index.
David Blitzer: Everybody wants to be able to issue a great sigh of relief that we've passed the bottom. But, of course, if it looks like we're approaching a new bottom, we can't do that.
The housing crisis led to the recession, but Blitzer notes it'll take other economic forces to help the housing market recover.
In Washington, I'm David Gura for Marketplace.
Housing recovery. Housing recovery. Housing recovery. Stop it already - you're embarrassing yourselves.
Consider this angle: My niece and her husband just bought a much reduced house for 2.7x their gross income; approximately in-line with the historical mean. By buying at a reasonable price they will have a manageable mortgage, more money to spend in the market and in 10 or so years money for investment. Not chucking money into an upside down house. Also, if one of them takes a pay cut they could still make the payment. This is a good thing. The problem with housing isn't that it's coming back down to where it should be - it's that it went up artificially.
Any talk of pushing housing back up is really just trying to foist one generations stupid mistakes onto the young.
