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US home prices dip
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In the US home prices fell for a seventh straight month in January, remaining barely above their post-housing bust low of April 2009.
Housing prices dropped in January for the seventh month in a row on a seasonally adjusted basis. Year over year, the closely followed Case-Shiller home price index for 20 U.S. cities fell 3.1 percent. Robert Shiller, the co-founder of the index, doesn't see an upturn anytime soon.
Robert Shiller, Co-Founder of S&P Case-Shiller Index said "Does anybody think that we might be back to the boom years in the space of the next five years? I can't find anybody who thinks that. Maybe the market will pick up and start growing at the rate of inflation or something like that. That's about the best that any responsible forecaster is predicting."
Shiller says home prices, over time, tend to follow inflation and, actual inflation, as measured by the government, remains quite low. But unemployment is still relatively high at 8.9 percent, one key reason the housing market is weak.
Robert Shiller said "People are just not feeling secure on their feet. That then comes back and limits their willingness to make a big investment in a house right now."
That unwillingness showed up in weaker than expected new and existing home sales reports last week. Meanwhile, foreclosures are on the rise. The Mortgage Bankers Association said the foreclosure rate in the fourth quarter rose to a new high: 4.6 percent. Shiller says that's no surprise, given the following scenario.
"Your mortgage is worth more than your house. You may want to take a new job somewhere - you lost a job or you have a job that's not promising anymore - but you can't sell your house and pay back your mortgage."
Shiller points out there are about two and a-half million U.S. homes that are on the verge of foreclosure. When they're eventually dumped on the market, that inventory glut is expected to hurt home prices even more.
