US & UK Housing Prices: getting worse

Housing prices in US have been declining very rapidly as compared to prices over the last couple of years. In fact, as on date, the average home price according to this chart, from National Association of Realtors is at a 8 year low, almost close to prices back in 2000. Have a look at the latest chart below.

With millions of homes as unsold inventory, another million or so in foreclosures, job losses, slowing retail sales, rising USD (hurting export prices), increasing debt, continued international wars, rising terrorism, things have never looked so bleak for the United States. The Fed interest rates at close to zero, are a shocker too. If things were so rosy, then the million dollar question (pun intended) is: Why are the interest rates so low?

Even the pace of decline in home prices has increased.

Distressed property buyers had provided some solace last month, however, even they have found other avenues or are looking at better ways to protect their money, given deteriorating sales and margins across industries.

Rising debt levels in USA and the false sense of security shown by USD over last few months will shatter the dreams of many investors in the future, with the economic situation worsening.

However, this is a global trend and not restricted to US. Even in UK, home prices have dropped and home sales are declining. The latest news coming out of UK, mentions that further price declines of upto 10% are to be expected over the next few months in 2009, inspite of the worst housing market in 2008.



Source: http://www.chartoftheday.com/20081224.htm?T
Published: Dec 24, 2008

Source: New York Times
November Home Sales Fell Faster Than Expected

Excerpts:
That trend is especially pronounced in regions of the country hit hardest by housing’s boom and bust. In parts of Southern California, more than half of all houses sold in November had gone through foreclosure at some point in the last 12 months, according to MDA DataQuick, a real-estate research firm.

Still, some economists said that home prices will fall even farther before they dip low enough to entice potential home buyers. Joshua Shapiro, chief United States economist at MFR, said that some parts of the country may only be halfway through such a retrenchment.

Source: BBC
House prices 'will fall further'
Excerpt:

"The numbers are going to get worse before they get better", warned the trade body's chief economist Simon Rubinsohn.