Still Too Early to Cheer Housing Starts – Irvine Real Estate – Irvine Homes for Sale

by Robert Mack on December 31, 2010

in Buyers, Latest News, Sellers

We recently learned that housing starts “beat” expectations in November, rising 3.9% over the previous month. I am not a housing expert, but I thought increasing supply in an already oversaturated market with depressed demand is a bad thing? �However, a recent Bloombergarticle discusses why more homebuilding is a positive for the economy as it would add a significant amount of jobs to the economy. While this may be true, I believe improvement would be offset by a continuing decline in home prices.

Home prices still falling
Despite the dubious calls that say housing has bottomed or that real estate is the buy of the decade, the fact of the matter is that home prices are still falling in most areas of the country. The most recent Standard & Poor’s Case-Shiller composite home price index showed home prices fell in all 20 cities that the index tracks in October from the previous month. This was even worse than September, when only 18 of 20 metro areas posted declines from the previous reading. �In October, the index fell by 1.3% from September, which is good for 0.8% decline year-over-year. That is pretty substantial, folks, especially in the face of the declines that have already occurred.

Zillow Real Estate Research estimates that by the end of the year, home prices in the United States might fall by more than $1.7 trillion, which is also significantly higher than the $1 trillion drop last year.

Another huge hurdle for the industry is the still-increasing number of foreclosures that add to the housing inventory. In fact, in the third quarter, more than 288,000 homes were foreclosed on — a record high that was an increase of 7% over the previous three months and 22% year-over-year increase. The number of foreclosures in the fourth quarter is expected to decline as a result of banks like Bank of AmericaJP Morgan, and PNC Bank placing a temporary moratorium on foreclosures due to the Robo-signer fiasco. However, the banks’ issues do not change the fact that many homeowners are still underwater and at risk of foreclosure.

via msnbc.msn.com for the complete article

Posted on Irvine Orange County Real Estate Market News

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