January home prices continue decline
JEREMY HOBSON: Now let’s get to this morning’s news about home prices. We just got the S&P Case-Shiller index which found average prices at their lowest level in 11 years. Prices dropped in all of the 20 cities in the survey, except Washington, DC.
Let’s bring in Juli Niemann, analyst at Smith Moore and Company. She’s with us live from St. Louis as she is every Tuesday. Good morning, Juli.
JULI NIEMANN: Good morning Jeremy.
HOBSON: So what do you make of these bad numbers this morning from Case-Shiller?
NIEMANN: Of course, we keep in mind all housing data is seen in the rear view mirror. But still, this is unrelentingly horrible. And it’s a huge drag on economy. Now the optimists were discounting the news saying it’s seasonal factors — bad weather — but bottom line this is the sixth straight month we’ve seen sales and prices go down. Even new home sales are down 28 percent year over year. We’re slumping our way into a double dip housing recession here and it’s getting worse. There’s no momentum for a turn around, inventory is still very high, lenders still have big inventory of houses in various stages of foreclosure, and they haven’t even put it on the market yet. And if you want a sense of impending doom, one in five homeowners have negative equity, and potential buyers out there — well if prices are going lower, do you really want to jump in yet?
HOBSON: Juli, quickly, I mean is there any solution to all of these problems in the housing market?
NIEMANN: Well, the creative solutions by bankers have to come around right now. It’s a little oximoronic but your choices are one: bulldoze and write off the assets. And they really don’t want to do that. Or, rent. Form a new real estate division. Renting — population is still growing. You’ve gotten rental shortage due to apartments being condiminiumized. And you want to get the adult kids out of the basement and into their own places.
HOBSON: Juli Niemann, analyst at Smith Moore and Company. Thanks as always.
NIEMANN: You bet.
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