Kai Ryssdal: Spring is the traditional home-buying season, right? Sadly, a lot of people seem not to have been told, and those people were home-buyers the past couple of years. And a gloomy report out today isn’t doing the American housing market any favors.
The real estate website Zillow.com says that in the first three months of the year, home values had their sharpest drop since the worst of housing recession back in 2008. Worse, with prices still dropping long after a lot of people said they’d start bouncing back, predictions of the long-awaiting housing bottom are anybody’s guess. Marketplace’s Janet Babin reports.
Janet Babin: The Zillow report comes as no surprise to real estate agent Ed Kiniry in Seattle. His business is off 40 percent from last year. And he knows what’s holding his sales back.
Ed Kiniry: People with relatively good credit still having trouble getting financing, and people still being a little gun shy, a little weary of getting back in the market because they’re not sure if it has bottomed out.
Many economists thought that bottom would come some time this year. But now Zillow and others have revised their forecasts and believe prices will keep falling until at least 2012, in part because of a glut of foreclosed homes.
Jonathan Miller is president of Miller Samuel real estate appraisers in New York.
Jonathan Miller: Foreclosures are probably peaking this year, but that only means we’re about halfway. We still have four to five more years of above-trend foreclosure activity.
Many of those foreclosed properties sell at discounts that drag down home prices even further. And foreclosed homes still on bank books serve as a grim reminder of all the lending mistakes they made.
Duke University economics professor Jacob Vigdor says that’s made banks afraid of their own shadow.
Jacob Vigdor: A lot of lending institutions out there got burned pretty badly. Because of that, they’re really scaling back and they’re looking more carefully at people’s credit records and asking for bigger down payment.
On top of conservative banks and shy buyers, the next hurdle for the housing market could be higher interest rates.
I’m Janet Babin for Marketplace.
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