House Prices Headed For First Triple-Dip Since Early 1990s: Analysis

Home prices may continue their free fall into the next year, weighing on the possibility of a full-fledged economic recovery, according to CNN Money.

The housing market is likely to experience a triple-dip, since home values are expected to decline another 3.6 percent by next June, according to analysis by Fiserv, cited by CNN Money. This decline would put housing prices at a new low of 35 percent below the 2006 peak in home values.

A spike in foreclosures and persistently high unemployment will weaken the housing market in the coming months, David Stiff, Fiserv's chief economist, said in an interview with CNN Money.

(Read the entire CNNMoney story here.)

If Fiserv's analysis holds true, it wouldn't be the first time the housing market experienced a triple-dip. Following the the recession between 1990 and 1991 housing prices experienced a triple-dip until 1995, according to data from the S&P/Case-Shiller Home Price Indices.

In the current cycle, an overhang of foreclosed homes is a big part of what's dragging down housing prices. Foreclosures drive down housing prices twice as much as vacancies, according to a study from the Cleveland Federal Reserve. As of August, house prices have fallen 32 percent since the peak in 2006, according to a widely cited index.

And the current glut of foreclosures is only expected to grow. Banks such as Bank of America froze or delayed foreclosures last year after investigations revealed that they had pushed through foreclosures with shoddy paperwork. Now as banks begin to initiate those once-frozen foreclosure proceedings, the number of foreclosure notices has surged.

The anemic housing market is threatening the possibility of a strong economic recovery, according to experts. To make matters worse, the unemployment rate has been hovering above 9 percent for months. One indicator of weakness of this recovery compared to others: It took the economy 45 months to rise above its pre-recession level, three times longer than the average of the 10 previous recessions.

The dim economic outlook has made consumers skittish about spending, especially on big-ticket items such as homes. Consumer spending overall has remained weak, falling this past summer for the first time in two years. Meanwhile, current homeowners are wary of buying new homes because they would need to take a large loss to sell their current home, since housing prices have fallen.

As consumers have become more cautious about buying a home, many potential homeowners have opted to rent pushing rents to soar. For example, rents in Manhattan have jumped to record highs, according to The New York Times.

Comments

[Steve Librandi]

05:37 PM on 12/03/2011

city bank sold me a place three years ago for 8 grand, it appraised in 2006 for 90k, had a 45k mortgage, new roof windows kitchen, for 7,400.00, 2200 square feet. buy now!

[marinatha]

04:04 AM on 11/01/2011

It's a fire sale and guess who will reap the profits?

[ReaItors Are Liars]

08:01 AM on 11/01/2011

Prices are still at grossly inflated 2004 level. They'd have to fall down to 1980's levels to be considered a fire sale.

If you think it's a "fire sale" now, what are you going to do when prices ultimately fall to their pre-bubble trend line levels of early 1990's?

[marinatha]

07:03 PM on 11/02/2011

Nothing.Im not looking to buy.And I do expect them to hit the bottom.But we will all be in this together.....unless your a 1%.

[Peanut Santiago]

03:25 AM on 11/01/2011

?????

Double dip?
Triple dip?
All I see is a downward spiral.

And the houses may go lower than they would be if there had been no housing bubble.
There are too many unemployed and underemployed to pay even reasonable prices for houses.

[ReaItors Are Liars]

07:59 AM on 11/01/2011

Get prices down to reasonable levels and anyone with a job will be able to afford a house and then this mess goes away. Not a second sooner.

[dtallwalk]

11:09 PM on 10/31/2011

The only way the housing is going to get better is when the banks adjust the loans down to current market value .in normal inflation this is where the prices should be
Until then the mess will not purge it self
So it comes down to how much can the US take befor it forces the banks to do it
Only time will tell
So stay tuned

[Peanut Santiago]

03:28 AM on 11/01/2011

Actually America NEEDS plenty of jobs, especially good paying jobs.

The housing mess can sort itself out eventually, but not without enough people making good wages who can afford to buy and keep the houses.

[ReaItors Are Liars]

08:02 AM on 11/01/2011

If that were true then how do you account for prices tripling during the bubble years when wages were falling and had been falling since the 1980's?

[DennisTheMenance]

10:20 PM on 10/31/2011

Housing prices have Dropped 32%? In Cleveland? I can Understand that..
In Vegas? I hear they are Reselling again?
But you can't build 5x as many Homes and not expect Over Saturation
Just like GM did, making 25% more cars a Yr for yrs
They're are STILL alot of Nice Used Cars for very good prices..So why bother Buying a New one?

We bought 3 Homes for ave of 25% Less and have them rented out..as Investment /Rental Properties..In Very nice Neighborhoods and Top Schools.. That's what Sells and Rents Houses
Not Homes in Not so Good Towns/or Average to Below Ave. Schools..

Why they don't take thos homes that haven't sold and just Rent them or Turn them into Duplexes or Condo"s

Or? Tear them down. I heard some are Costing more for the Real Estate Taxes than the cost to own the home now.. When your Get your RE tax bill? Fight it..! It's becomming a Windfall for towns to Be Getting those Over Valued RE taxes..

[ArchbishopBenevolent]

08:42 PM on 10/31/2011

It is going to get worse. The market is a mess because the banks are still holding on to properties rather than sell them at market prices. We were in Florida looking to condos to buy. Most of the places were run down, smelt bad and had insect and vermint damage from being in the market so long. I would be very cautious in this market.

[ReaItors Are Liars]

09:12 PM on 10/31/2011

Offer $100 for the condo then.

[Jeffin90019]

06:02 PM on 10/31/2011

I'm one of those rare Americans who has the money to buy a house. In some cities, I could buy a home with cash. But I won't. Why would I buy a house today when millions of mortgages may be renegotiated and drive housing prices further down? Why would I buy a house when it's been proved that mortgages are literally not worth the paper they're printed on? Why would I buy a house and have to pay property tax every years?

[DennisTheMenance]

10:23 PM on 10/31/2011

Well, Only if the Home is in a Good Neighborhood with Good Schools and No Minorities living in it.. Then If you have Good Renters lined up..
Otherwise, if their are too many like the one your looking at, on the market? Pass..
We have been buying Homes for Investment-Rental Properies ..But stay in the higher Income Towns and Schools.. Jsut buy Quality, not quainity..

[norkas]

05:29 PM on 10/31/2011

Homes will adjust in price across the nation.

As people earn less money homes will reflect what the consumers can afford

What soon will be adjusted big time is the massive speculation on homes and condos over $500,000 and up. Million dollar homes and condos were built as if each millionaire would purchase 50 to 60 homes.

There will be over a trillion dollar loss to banks because they will soon have to take the loss on their most valued properties they have been holding in hopes of the housing market coming back.

[AJH]

03:50 PM on 10/31/2011

It's very likely. Who generally makes up the Housing purchasers.

1) frist time buyers and
2) Sellers and repurchasers moving up homes.
3) Retiree's
4) Vacation Homes

Category 1 generally has credit challenges, category 2 are in underwater mortgages on their existing properties. Which means their option to move up is rent existing property and purchase assuming they have enough capital.

Category 3 is putting off retirement.

Category 4 is 1 percent of the population.

[Dan Lavry]

03:31 PM on 10/31/2011

Home prices should be based on real income, material costs, labor cost and a few similar "real world items", not on "programs" to help re-elections.

One possibility is to wait until the market settles, and that may take years.

Various government attempts to hold the prices artificially are unfair to renters and to those that don't own a home (or live in one owned by a bank). In particular, taxing renters to keep other people in homes is very unjust and unfair.

To speed up the process, one should force the banksters to agree to put a much reduced value on homes across the board. That would:

1. Reduce mortgage payments (a benefit to home owners)
2. Lower the number of foreclosures (less pain all around)
3. Help potential future buyers (lower home price)
4. Keep people that did not participate in the bubble out of that mess.
5. The banksters will get to collect what they should have if they were honest to begin with.

I do not know if the government can legislate a reduction in home prices "across the board". The banksters will resist. They are the only entity that will stand against it. Everyone else will benefit!

I don't see any logic or evidence suggesting that the market will reach bottom next year. Such a prediction cannot be disconnected from predictions about the economy as a whole. At this point we don’t even know what the super-committee will come up with in next month….

[ReaItors Are Liars]

03:44 PM on 10/31/2011

1. Are you volunteering to take the loss?
2. Is that a magic wand in your hand?
3. Prices are going lower like you've never imagined.
4. Anyone who bought a house 1998-2010 is going to lose alot of money regardless.
5. The *investor* will be made whole either through foreclosure or the borrower performing

[AJH]

03:56 PM on 10/31/2011

Debt mobility. Functionally there are likely a good number of financially cautious homeowners that purchased nearly a decade ago who are underwater on their existing mortgage but not really financially troubled. A subset of that group likely has savings for their palnned upgrade home independent of selling the first asset.

However becoming a landlord carries cash flow risks while creating a program that enables debt mobility from their existing mortgage to a new mortgage with appropriate down payment. Functionally they would end up less underwater or even not underwater and with a close to equivalent payment structure considering interest rate modifications.

benefits if structured properly. Take two underwater assets and get them in the green. 2 transactions, create skill mobility, stimulate spending.

If you want to get the market going you have to give people ways to spend and negative equity and a lack of debt mobility is taking a whole subset of potential consumers out of the market. People who can't and wouldn't default or go bankrupt.

[1ccc1]

03:30 PM on 10/31/2011

This is more bogus framing to push bailout scams (covered [promoted] on other pages). The housing bubble during the dot com runup never finished properly deflating, before 99' when clinton/congress signed off repeal of glass steagall and the fake housing market started to skyrocket. This non-sotry is only to generate more bogus 'sympathy' for a Fake Market.

Prior to dot com, housing had an average appreciation of 5% over twelve years time. Buying a house was Not a means to 'get rich' it was a place to put your money and hopefully keep most of it, while having control of property you were paying for. That grossly skewed in 2000 as Liar Loans became the norm.
The market is a entire fake, and the correct outcome is for it to continue resetting to 95' levels.

Also fake is obama giving Sole right to goldman sachs vulture 'investor groups' to buy billions in foreclosures - you know, they ones You and I were forced to pay for- which they will get for pennies on our dollar so they can become the biggest rent lords in the world and keep rents High. There's obama, trashing the little people by letting his rich wall street buddies take advantage of renters and foreclosures.

The bailouts are not going to change the market, it's heading down regardless, bailouts only reward banksters and liar buyers on the backs of the honest. The bailouts and bogus refi's need to Stop.

[Jill1975]

08:35 PM on 10/31/2011

Do you have any reference for your claim that Goldman Sachs investor groups are buying foreclosed properties for pennies on the dollar ?

[1ccc1]

01:58 AM on 11/01/2011

Here you go. Only for the rich hedge fund 'investor groups'. Not for the little people. Sorry.

http://www.thestreet.com/story/11224917/1/a-huge-housing-bargain--but-not-for-you.html

[Media Saint]

03:26 PM on 10/31/2011

What’s Happened to the Big Players in the Financial Crisis

http://www.propublica.org/article/cheat-sheet-whats-happened-to-the-big-players-in-the-financial-crisis

[Media Saint]

03:24 PM on 10/31/2011

This is a great site. Check out their past articles for accuracy. I have followed them right through the 2008 collapse.

http://www.leap2020.eu/GEAB-N-58-is-available-Global-systemic-crisis-First-half-of-2012-Decimation-of-the-Western-banks_a7904.html

[ReaItors Are Liars]

02:41 PM on 10/31/2011

Housing Prices are still grossly inflated.

The Problem: Grossly Inflated Housing Prices

The Solution: Dramatically Lower Housing Prices

The Solution is coming to every town, city and state in America.

[4eva]

01:58 PM on 10/31/2011

We overbuilt
We overpriced
It was a bubble.
Bubbles are not sustainable over the long term ... they burst.

RE 'value' was illusory.
Deal.

[Binea]

02:17 PM on 10/31/2011

read through my comments and those I have been reading and responding to ( you can ignore the religious threads :) ..Inthepast few days..seems..our gov is keeping the economy badonPurpose...refer to Ron Pauls debt ceiling plan,and ask WHY they did not use it.
would have stopped the down grade,given congress 2 years to fix economy and not had ANY cuts or tax raises..it was perfect and simple..They keep the soap opera Drama going to distract and divide us.

They have committed fraud on a huge scale and Obama is working out deals handing out poisoned bread crumbs on Housing deals ?
Gitner forcing his hand,I'm sure ( Gitner tried to get him to go around the constitution to do what GITNER wanted on the debt ceiling too..if you remember)
go back and watch the whole charade again..a question WHY they did not do what Paul suggested.

and WHY they do not come together NOW to fix economy BOTH sides work for the SAME people..this is a charade. so WHY the charade hmm ? is it really just Politcs trying to keep their base ? maybe it is much more than that.

Maybe they want to distract the world from their manifest destiny schemes in the mid east..but also from the fact they RIPPED OFF not only America ..with Nafta and the fraudulent Fanny Freddy deals.. Butthe WHOLE WORLD..
the world is in economic turmoil because of OUR Federal Reserve

[Binea]

02:44 PM on 10/31/2011

here is a link to the thread I was reading and commented on..so you don't have to muddle through all my other comments

http://www.huffingtonpost.com/social/Binea/human-population-how-does_n_1064390_115748766.html

[4eva]

06:50 PM on 10/31/2011

Thank you Binea
I don't know. I go back and forth on whether this was all intentional or not.
I believe in the law of unintended consequences ... nobody could screw things up this badly ... even if they were trying to it must have gotten out of hand even for them. :)

Cheers