The consensus of opinion is that US house prices will continue to fall this year, by a minimum of 5%. A slew of predictions for a down market have followed the recent report by Corelogic showing that US home prices fell 5.3% year on year in November, the fourth consecutive monthly fall and also acceleration on the 3.4% fall seen in October the report said.
IHS Global Insight is predicting a 5-7% fall for this year, in their predictions they point out that the tax credits lead to false hopes of a market in recovery which have since been proven so.
A sentiment echoed by Corelogic. Rather than draw many new buyers into the market, the credits “just pulled sales forward,” said Sam Khater, CoreLogic senior economist. The higher rate of decline in prices in November from October underscores the big challenges the market faces with recovery, he says.
Moody’s Analytics also highlighted the lull after the tax credits, further saying that the credits precipitated a double dip in the housing market.
The economy avoided a double-dip recession, but “Housing is double dipping,” said Moody’s economist Mark Zandi. Zandi also predicted a 5% fall but said it will have happened by midyear.
By the time prices hit bottom, the housing crash will have lasted five years and driven prices 35% off their 2006 peak, he says.
The Corelogic report showed prices rising in 6 states, New York, Wyoming, Indiana, Vermont, North Dakota and Maine. Maine’s 8.6% growth was by far the largest, with North Dakota a distant second at 4.4%.
Zillow, the second largest US property portal paints an even more dire picture. According to the firm, which does not count repossessed sales, the 5.1% fall in November represented the 53rd consecutive fall and brings prices down to 2003 levels.
Zillow expects sustained declines until late 2011. Even then, “The bottom will be very long and rocky,” says Zillow chief economist Stan Humphries.