Home prices continue to fall and the trend continued in November, as prices dropped more than expected.
The latest S&P Case-Shiller 20-city composite index of home values showed prices were down 3.7% from the same period in 2010 and down 0.7% from October. Economists had predicted a yearly decrease of 3.3% and a month-over-month decline of 0.5%.
For three straight months property values have ticked down and have settled at a seasonally adjusted low not seen since February 2003.
“The only positive for the month was Phoenix, one of the hardest hit in recent years,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “The trend is down and there are few, if any, signs in the numbers that a turning point is close at hand.”
Barry Ritholtz, CEO of Fusion IQ and author of Bailout Nation, is not so optimistic about the housing market. He joined The Daily Ticker’s Henry Blodget to discuss why he thinks home prices still have a long way to go before rebounding.
“If this is the bottom then this will be the first time that a major boom and bust hasn’t careened past fair value,” says Ritholtz.
Historically, when a bubble bursts it tends to overshoot on the downside just as it does on the upside. (See: Robert Shiller: A Housing Bottom? What Are They Thinking?)
In the accompanying interview, Ritholtz gives a couple of reasons why his opinion does not fit in with the consensus view that housing may be headed for a recovery. The most telling is the fact that many Americans are still without jobs and those who do have jobs have experienced slowing wages. Both economic realities make it very difficult for working men and women to earn money for basic necessities let alone save up enough money to put toward a down payment on a home.
Ritoltz is not currently predicting how far below fair value prices will go or when the bottom will hit.