Housing’s Second Leg Down
by PAUL JACKSON
Monday, August 23rd, 2010
Home prices have fallen 34% from their peak in the middle of 2006, according to Standard & Poor’s HPI data — but is that enough? Or is there further to go? How much further could we fall?
It’s worth noting that the question of what happens next with home prices isn’t merely an academic exercise. With CoreLogic estimating that more than 11.2 million U.S. borrowers were underwater on their mortgages at the end of the first quarter, the direction of U.S. home price trends over the next few years will have a direct impact on bank and related financial balance sheets the world over.
With that in mind, take a look at chart 1, below. It shows data from the Standard & Poor’s/Case-Shiller monthly housing price index, using the 10-city index (unadjusted) from July 2006 until today.