The downward spiral of housing prices is said to be worse than it has ever been. Yes, it is officially worse than at the time of the Great Depression. Researchers at think tank Capital Economics have come out with this stunning news. This rather pensive piece of information follows equally devastating news that house prices dipped again in March from Case-Shiller - and it only seems to be getting worse.
Paul Dales, senior economist at Capital Economics, writes that, according to the Case-Shiller measure, house prices have peaked well below the 2006 mark of 33% and have reached new heights last experienced by the nation in 2002. The house prices are now at 31%, which is the decline of the housing market last endured in the Great Depression.
So you may look at these statistics and ask what recovery?
This indicates that Wall Street is putting on a big show. Wall Street is in the throes of pretense and drama and there is sufficient proof nationwide that the
financial crisis is not getting any better. In fact, it is only getting worse!
The Dow Jones, however, is high as a kite and will not believe a word you say about the financial crisis. The industrial average of The Dow Jones is at 0.079%, which means that it is above average at 12,000. Wonder what Wall Street is smoking?
Capital Economics are not wasting any time telling the truth as it is. They believe that the latest house price double dip is nothing new. This pattern is similar to that of what people experienced in the early 30s. At that time a brief recovery was outlined much like it is today. The world is also experiencing similar problems in the housing market. The think tank says that house prices are going down the slopes, and before you know it, it will hit rock bottom. This is bound to take place sometime next year.
The house price double dip has left nearly 30% of homeowners with negative equity. This may result in the Feds resorting to Quantitative Easing III. The Feds are bound to give it a more respectable name, if it is only to save face. In certain ways Case-Shiller may be slightly off the mark, where the house price collapse is even deeper. The official data released has not accounted inflation. In the Depression era there was deflation, which meant that each dollar your home was worth was more valuable. Today inflation is modest. The country probably needs more inflation and if Ben Bernanke, the Fed chairman, has his own way, you will probably see it in the near future.
The Case-Shiller report is also known to hide housing market variations. House prices have collapsed in several suburbs, exurbs and rural areas. Las Vegas, Miami and Phoenix have also been hit badly. In Boston and Manhattan the decline has been milder. Some high end estates in these areas are said to be selling well. It seems like the buyers have money in their pockets.
There is good news to all this. If you have the financing, housing is dirt cheap. It is the cheapest in 35 years and stands at 24%.
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By Richard B Snyder
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