The Housing Market Continues to Be a Drag

I see that Zillow is predicting an 8% reduction in housing prices this year, and that sets well within the 6% to 11% reduction predicted by Morgan-Stanley.

Just when things look bad, they get worse, but we can hope that California sunshine wins out.

The foreclosure rate is slowing, but what we don’t know is whether that slowing is the result of fewer people in financial trouble or lenders holding off to try to stabilize a market in which they are hemorrhaging money in holding foreclosed housing in a lowering market. If the latter is the case, then it just prolongs the misery.

Either way, it isn’t good news, and it makes Buyers hold off making decisions, or offering still less to get next year’s lower prices, today.

There is both statistical and anecdotal  information that there are economic signs of recovery, including a lot of new cars on the road. The housing market is languishing because, among other things, potential Buyers are holding off until they think the housing decline is over (making it a self-fulfilling prophesy), and spending money on new cars while waiting.

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