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More "unexpected" bad news on the economy

The economy seems unimpressed with teleprompter skills and unicorn farts.

The Housing Market, the crash of which (as most will recall) was the precipitating event of the current recession, has just hit the double dip point.

'Double-Dip' in Housing Prices Even Worse Than Expected

Reuters | May 31, 2011 | 09:05 AM EDT

U.S. single-family home prices dropped in March, dipping below their 2009 low, as the housing market remained bogged down by inventory and weak demand, a closely watched survey said Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas declined 0.2 percent in March from February on a seasonally adjusted basis, in line with economists' expectations.

The price index was below the low seen in April 2009 during the financial crisis. The glut of houses for sale, foreclosures, tight credit and weak demand have kept the housing market on the ropes even as other areas of the economy start to recover.

The 20-city composite index was at 138.16, falling below the 2009 low of 139.26.

"This month's report is marked by the confirmation of a double-dip in home prices across much of the nation," David Blitzer, chairman of the index committee at S&P Indices, said in a statement. "Home prices continue on their downward spiral with no relief in sight."

Eight cities fell 1 percent or more in March, while Washington was the only city where prices increased on both a monthly and yearly basis. Prices in the 20 cities fell 3.6 percent year over year, topping expectations for a decline of 3.3 percent.

"The declines sustained in the last 12 months have almost erased the gains of the previous 12 months. The housing market is treading backward, but not drowning," said Cary Leahey, economist and managing director at Decision Economics in New York.

In the first quarter, the national index fell 1.9 percent on a seasonally adjusted basis, compared to a decline of 1.8 percent in the previous quarter. On a non-adjusted basis, they fell by 4.2 percent in the quarter. Nationally, home prices are back to their mid-2002 levels, the report said.

Blitzer told CNBC that the decline in prices, though fairly widespread, has become more prevalent in geographic pockets--the Southwest and Southeast as well as the Michigan and Ohio manufacturing regions.

"What we've seen over the last few months despite the decline in prices is we've gone back to the old 'location, location, location' story instead of everything going down at once," he said. "California has clearly broken out of the pattern it was in, which is a big plus."

Though there had been hopes in the industry that prices were troughing and ready to turn higher, the latest trends show little hope in sight until later this year or early in 2012, he added.

"Everybody's now keeping their fingers crossed for 2012 and wondering whether people just don't want to own homes anymore," he said.

On a non-adjusted basis, they fell by 4.2 percent in the quarter.

Will a double dip recession announcing itself in the third or fourth quarter of this year also be "unexpected"?

Personally, I look forward to the "unexpected" unelection of the current administration in November of 2012 by a voting public fed up with "unexpected" economic news which was entirely expected.


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Comments (7)

Not to worry, Recession V2.... (Below threshold)

Not to worry, Recession V2.0 will also be "unexpected".

If there is a recession lat... (Below threshold)
Tsar Nicholas II:

If there is a recession late this year or at any time next year, the chances of that news getting through the mass media's filters and becoming a matter of common knowledge out there in Zombieland are slim to none.

Headline: Economists une... (Below threshold)

Headline: Economists unexpectedly fired after consistently being wrong about future performance despite steady, long-term historical patterns and predicable future performance.

I think these 'economists' they keep polling are the guys that weathermen make fun of.

What kind of irritates me w... (Below threshold)

What kind of irritates me with the "unexpected" crap with this housing situation is that even a decade or more ago one could find articles citing the concern about the possible pending glut in the housing market. That is there was the looming retirement of baby boomers and the growing numbers of empty nesters who would be looking to down size their homes. These homes would be on the market for a generation that was not as large nor having as many kids as previous generations. So this problem was anticipated some time ago. Unfortunately the government getting people into homes they could not afford has compounded the situation, but the generational issue is not going away so it is going to make it very difficult for the housing market to recover no matter how much money/credit the government throws at it.

Since we live in a "Special... (Below threshold)

Since we live in a "Special Interest" state what the government decides is a priority is pretty much dependent on the special interest to mobilize its lobbying clout around a specific policy. The FIRE sector (finance, insurance and real estate) got clobbered in 2008. And they immediately mobilized their forces to get the government (read taxpayers) to make them whole again.

The TBTF banks have been allowed to extend and pretend that they actually have healthy balance sheets, when in fact, if their residential and commercial loan portfolio balance sheet entries were valued at actual market prices they'd be bankrupt toast. On the real estate construction to sales pipeline all the rescue programs have failed to draw new buyers into the market, in spite of continued low mortgage rates and down payments (FHA loans). Too many homes, apartments, office buildings and malls were built on the back of expectations that household debt capacity was unlimited!

Now the U.S. economy has to pay for the unwind until local median home prices begin to approach an amount that is no more than 3 times median income. For example, the median income in California in 2010 was about $55,000 while the median single family home price was about $330,000. Conclusion: Look out below! The probability that real estate values will continue to fall is built into the numbers. But for our jounalista community, it's all about what's best for their main man, not informing the public about some hard truths.

2012 brings the welcomed pr... (Below threshold)

2012 brings the welcomed promise of Barry's expiration date!

Surprise!"The r... (Below threshold)


"The report suggests that private payrolls increased by 38,000 in April. That pales in comparison with the expected increase of 170,000 private payrolls, as estimated by economists"

Surprise! The sun came up in the east again! Surprise! Ice is cold! Surprise! The light turned red after it was yellow! Surprise! Not everyone is "better off" when you "spread the wealth around"!






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