Home prices are slipping lower in most major U.S. cities. This is especially important, since housing is one of the most important sectors in the U.S. economy. According to the S&P/Case-Shiller national home price index released on May 31, home prices are at their lowest since 2002. They have declined 5.1 percent from a year ago and 32.7 percent from their peak in 2005. Another S&P/Case-Shiller Index tracking 20 major cities showed an overall decline in home prices in March.
The only city in that group to show a gain was Washington, D.C. where prices rose 4.3 percent. Every other city studied showed a drop in prices. Some of the worst hit include Phoenix, which dropped 8.4 percent, Portland, Oregon, which fell 7.6%, Minneapolis, with a 10 percent drop and Chicago, which fell 7.6 percent.
Not surprisingly, when home prices fall, home builders slow down their production. The decline in new home construction adversely affect the economy, especially the job market. Economists tell us that new home construction adds a dollar for dollar benefit to the economy. For example, the construction of a $250,000 home adds $250,000 to the GDP.
Not surprisingly, when home prices fall, home builders slow down their production. The decline in new home construction adversely affect the economy, especially the job market. Analysts say that when a $300,000 new home is constructed, it adds $300,000 to the economy as measured by the GDP.
1) Youngstown, Ohio, where the median price of a home is $55,000 2) Lansing, Michigan, $64,000 3) Toledo, Ohio, $64,900 4) South Bend, Indiana, $68,700 5) Akron, Ohio, $74,900 6) Ocala, Florida, $75,400 7) Dayton, Ohio, $78,000 8) Cumberland, Maryland, $80,700 9) Grand Rapids, Michigan, $81,100 10) Decatur, Illinois, $81,300
Things in the housing sector have not been all bad since the recession. In mid-2009 the housing industry saw a modest recovery of about 5 percent of past price losses. The home buyer tax credits were responsible for this small recovery. Unfortunately their effects fell off as soon as the credits expired last April.
The increase in foreclosures, sales of distressed homes and continuing high unemployment are to blame, according to analysts. According to the U.S. Census Bureau, the number of Americans who own their own home has dropped 66.4 percent in the first quarter of 2011. The peak was 69.2 percent in late 2004. They say that homeowner rates are at 1998 levels and no one is optimistic about the immediate future as home sales lag. Most experts agree that the rate of Americans who own their homes will fall further in the short term. A fall to new recession lows is predicted by the S&P?Case-Shiller Index which monitors 20 major U.S. cities.
The large number of foreclosures on the market, combined with the so-called 'shadow inventory' of homes that will become foreclosures in the coming months, are clearly driving prices of all homes down. Moreover, the number of foreclosures is having a chilling effect on the actions of some who may have considered buying a new home. It is said that almost one-third of people know someone who was forced into foreclosure, had to perform a short sale or had to apply for a loan modification.
In addition, many foreclosed homes which have now been repossessed are in poor condition because no one has been around to maintain them, which can also drive down the overall value of surrounding homes. So, when will things improve? When other sectors of the economy improve, housing may soon follow.
The only city in that group to show a gain was Washington, D.C. where prices rose 4.3 percent. Every other city studied showed a drop in prices. Some of the worst hit include Phoenix, which dropped 8.4 percent, Portland, Oregon, which fell 7.6%, Minneapolis, with a 10 percent drop and Chicago, which fell 7.6 percent.
Not surprisingly, when home prices fall, home builders slow down their production. The decline in new home construction adversely affect the economy, especially the job market. Economists tell us that new home construction adds a dollar for dollar benefit to the economy. For example, the construction of a $250,000 home adds $250,000 to the GDP.
Not surprisingly, when home prices fall, home builders slow down their production. The decline in new home construction adversely affect the economy, especially the job market. Analysts say that when a $300,000 new home is constructed, it adds $300,000 to the economy as measured by the GDP.
1) Youngstown, Ohio, where the median price of a home is $55,000 2) Lansing, Michigan, $64,000 3) Toledo, Ohio, $64,900 4) South Bend, Indiana, $68,700 5) Akron, Ohio, $74,900 6) Ocala, Florida, $75,400 7) Dayton, Ohio, $78,000 8) Cumberland, Maryland, $80,700 9) Grand Rapids, Michigan, $81,100 10) Decatur, Illinois, $81,300
Things in the housing sector have not been all bad since the recession. In mid-2009 the housing industry saw a modest recovery of about 5 percent of past price losses. The home buyer tax credits were responsible for this small recovery. Unfortunately their effects fell off as soon as the credits expired last April.
The increase in foreclosures, sales of distressed homes and continuing high unemployment are to blame, according to analysts. According to the U.S. Census Bureau, the number of Americans who own their own home has dropped 66.4 percent in the first quarter of 2011. The peak was 69.2 percent in late 2004. They say that homeowner rates are at 1998 levels and no one is optimistic about the immediate future as home sales lag. Most experts agree that the rate of Americans who own their homes will fall further in the short term. A fall to new recession lows is predicted by the S&P?Case-Shiller Index which monitors 20 major U.S. cities.
The large number of foreclosures on the market, combined with the so-called 'shadow inventory' of homes that will become foreclosures in the coming months, are clearly driving prices of all homes down. Moreover, the number of foreclosures is having a chilling effect on the actions of some who may have considered buying a new home. It is said that almost one-third of people know someone who was forced into foreclosure, had to perform a short sale or had to apply for a loan modification.
In addition, many foreclosed homes which have now been repossessed are in poor condition because no one has been around to maintain them, which can also drive down the overall value of surrounding homes. So, when will things improve? When other sectors of the economy improve, housing may soon follow.
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