Housing Double Dip 2011 - The housing market may see a double dip in 2011. This is the phenomenon in the market where we have a big fall in prices, only to recover a some point in the future. But this recovery isn’t solid as the market drops a second time catching everyone by surprise. It has happened many times in the past both in the housing and stock markets. This is what people call the double dip and if you are not careful, then you can be burned.
According to the Shiller economic index, month to month housing prices dropped in 19 of the 20 monitored U.S. cities. They released this report on this past Tuesday. 17 of these 20 cities have experienced slowed annual growth rates which is not a good indicator for the future. Looks like trouble might be ahead. The evidence is in eight of these cities that have shown prices have fallen further than the lows set in Spring of 2009. These cities include Atlanta, Charlotte, N.C., Detroit, Las Vegas, Miami, Portland, Ore., Seattle, and Tampa, Fla.
Housing Double Dip 2011
You may be looking at this information and thinking, this could be a great thing for those that are into real estate investing, but consider what the experts are saying. A month ago, S&P Index Committee Chairman David Blitzer said in a statement, “The double-dip is almost here … there is no good news in October’s report.”
This month, he repeated that claim. “With these numbers more analysts will be calling for a double-dip in home prices,” he said.
“While not always consecutive months, 13 (of 20 monitored cities) … have posted at least seven months of decline since the beginning of 2010,” he added.
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Personally, I am about as optimistic as Blitzer. I believe a double dip is coming as well. The killer for me is that if you are watching the news media, the talking heads, and the stock market, you would be duped into thinking the country is in full blown economic recovery mode. But when you analyse the data that is under all of this fluff, it doesn’t look so great.
Taking into consideration the sheer number of people that are currently into foreclosure, the unemployment rate, and the fact that people do not have any savings and are drowning in debt, I don’t see how the country can recover.
Foreclosure - It is said there is another3 to 4 years of housing inventory that is waiting to be foreclosed on. This means that if no other homes on the market sold for the next four years that all of them would be foreclosures. That is amazing and not something that you can just overlook as temporary. These sales will grossly effect housing values as they will be the only comparable sales to use for valuation. And as a former real estate appraiser, I can tell you value is all about comparable sales. This is the art of what you can prove.
Unemployment – To me it is ridiculous to talk about unemployment rates going down if you don’t consider half the people that are unemployed. The way we run our figures only count a person as unemployed if they have been out of work for only so long. And it doesn’t even take into account the people that were self-employed but lost their businesses through the changing of the economy. So when I hear them say the unemployment rate is below 10%, I say pfft, what a crock of bullshit!
Drowning in Debt – A country where the Government and the people are drowning in debt cannot be in recovery mode. I don’t care what the talking heads say. You can show some strength to the world, but you are crumbling from the inside out. The rising housing market of a few years ago covered up our faults of overspending. You had the option of refinancing your home every few years because the values were rising so rapidly. Homeowners would be able to take this money from the refinance, pay down debt, and buy more stuff they don’t need. But today, those days are dead. You will be lucky if your home isn’t worth much less than you paid for it today. No more piggy bank of the home.
I think these signs and the fundamental economic data suggest the country is in trouble and headed for a double dip which the second one might be larger than the first. Sure hope not as I own a home in all this madness and would love to make some money on it at some point. But that is enough from me. I want to hear from you and what you think about Housing Double Dip 2011.