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U.S. home prices decline more than expected

Stacey Vanek Smith Jan 31, 2012

Kai Ryssdal: If ever the four remaining Republicans in the race had a plan to fix the housing market, this would have been a good time to roll it out. We’ll dig deeper into the economics of the 2012 presidential race a bit later in the broadcast, but it does seem that real estate in this country just can’t catch a break.

The Standard & Poor’s Case-Shiller Home Price Index came out today. I’m sorry to say prices are back to where we were in 2003. Marketplace’s Stacey Vanek Smith has more.

Stacey Vanek Smith: Waiting for the housing market to improve can seem a little like waiting for Godot, except with more statistics.

Today’s statistics showed November home prices dropped in 18 out of 20 U.S. cities compared to the year before. Richard Green directs the Lusk Center for Real Estate at USC.

Richard Green: The Case-Shiller numbers are still pretty bad. People still don’t have enough confidence to buy houses, but the other thing we’re seeing is a lot of deals are getting broken up because people can’t get financing.

And even if the banks loosen up and lend at historically low interest rates and more deals start closing, home prices are likely to stay low says Glenn Kelman. He’s the CEO online real estate brokerage, Redfin. He says that’s because banks are sitting on a backlog of more than a million foreclosed homes.

Glenn Kelman: No matter how many cereal boxes people want to buy, there will always be more boxes in the back room. So any chance of price appreciation for the next, probably five years, is gone.

Still, Kelman expects we’ll start to see a lot more buying and selling this year. And, if that’s the case, does it really matter if home prices don’t rise? USC’s Richard Green says yes.

Green: You have a lot of people who are underwater right now. And they’re stuck. And until they see some hope that they’re going to get unstuck, I think it’s very hard to have a rip-roaring recovery.

More than a quarter of U.S. homeowners owe more on their houses than their houses are worth, which means they can’t sell or buy — they just have to wait for prices to rise.

In New York, I’m Stacey Vanek Smith for Marketplace.

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