Despite the many billionaires created by property investments in the US, the US domestic housing market is in a bad way right now – with more doom and gloom predicted, at least in the short term.
The latest Case-Schiller Index reports further drops in house prices, by as much as ten percent in some states. California and Florida are leading the price declines with prices in San Diego dropping by 8.3 % this year-to-date. House prices are at a six year low across the country and the average drop was 4.4%, with no end in sight.
“I think the housing market has got another year of very weak sales, falling construction and lower home prices. And all of that assumes that the economy holds together reasonably well and we don’t have a recession,” said Mark Zandi, chief economist at Moody’s Economy.com. The Joint Economic Committee estimates there will be 1.3 million foreclosures from mid-2007 through 2009 in subprime mortgages, loans provided to borrowers with weak credit histories, which will wipe out an estimated $71 billion in housing wealth directly and another $32 billion indirectly by lowering the values of neighboring homes, according to the report by the JEC’s Democratic staff.