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Case Schiller Reports Home Prices And I’m Worried

by Charlie Allred

The S&P Case Schiller Report was released yesterday. For those of you who don’t know what this is:

The S&P/Case-Shiller Home Price Indices are the leading measures for the US residential housing market, tracking changes in the value of residential real estate both nationally as well as in 20 metropolitan regions. The indices are calculated monthly and published with a two month lag. New index levels are released at 9am Eastern Standard Time on the last Tuesday of every month.

The most recent report shows that home prices keep falling! In fact, home prices in the month of November 2010 fell another 1.59%. But the interesting thing is that Consumer Confidence rose! Yep Consumer Confidence numbers shot from 54 to 60.6!

So it looks like all the chatter about an improving economy put out by the talking heads on the news has had a positive effect on how we feel. And, I must say I’m all for feeling good, yet it may be better to see real numbers improving.

When you look at the market in Arizona for example… We are seeing a tremendous number of people upside down on their mortgages. This has caused a great deal of trouble in rising foreclosures and Arizona short sales. Ultimately, we asĀ  a people must see real change in the numbers to feel good about a recovery and honestly the numbers are not there yet.

With mortgage rates at 4% and falling prices, we are basically setting the stage for another boom-bust cycle in housing. What we really need is to allow the system to work off the excess inventory, promote stable prices, and allow home owners facing short sales and foreclosure to act toward a positive outcome.

In the current environment, the only thing preventing another bubble is high unemployment and high inventory. Again, which point to the fact that reality is not what sentiment is. Until reality shifts, we probably won’t see a fall in the number of foreclosures and Arizona short sales.

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