OVERALL, HOME PRICES FALL - But Still Not Cheap Versus Average Wages!
LOWER AVERAGE EARNINGS, HIGH UNEMPLOYMENT SUGGEST FURTHER CONTRACTION LIKELY!
Year to year, according to the latest-available S&P/Case-Shiller Index of home prices, Chicago Home Prices fell over 16.4%, year over year between January, 2008 and this past January, and 4.6% compared to last December.
And Chicago doesn't have the least attractive indices. The index in the Phoenix Metro Area dropped 35% year over year. In Las Vegas Metro, the decrease totaled roughly 32%. In Miami - 29%.
Minneapolis displayed an index drop of 20% - even worse than hear in Chicago.
See Brett Arends story in yesterday's Wall Street Journal for more. Full details on the latest Case-Shiller Survey was reported in the March 31st Wall Street Journal, in a Real Time Economics Blog Post by Phil Izzo.
How much further will the Case-Shiller Index, as well as the Median Price of Homes Across the Chicago Area, fall? Unclear, of course!
But nationally, on average, index prices on homes, again according to Case-Shiller, have reverted to levels last seen in 2003. Back then, the rapid price escalation in many markets was in full swing. According to many experts, you have to go back to around 2000 to find pre-bubble price appreciation.
So, mathematically, there could be more downward pressure on prices, despite near-record-low interest rates - in many cases, 5% or less for the best buyers - right now.
Historic Case-Shiller Price Index Data, going back to the late 1980's, indicate today's even-depressed home prices are actually more expensive, relative to average household earnings, than they were in 1989.
And, as Arends continues to observe, when the Real Estate Price Bubble of the late 1980's burst, it took roughly eight years before the Real Estate Market began to boom once again.
See his further comments in his story.
DEAN MOSS & DEAN'S TEAM CHICAGO
