Case-Shiller: Why the Sky Isn't Falling
Nope. For the 70 million home-owning Americans who don't have a need to sell their homes at the moment, this is not the end of the world. Yes, they can thank their lucky stars that they still have jobs and didn't get ensnared in a toxic mortgage. And yes, they can feel for their friends and family who weren't so fortunate -- or, if they are feeling less charitable, weren't as smart as they. But for the bulk of Americans, this is a problem that, well, doesn't hit that close to home.
Want perspective? Of the 75 million owner-occupied homes in the U.S., about 5 million were sold in the past year, which means that there were tens of millions of home owners who were content to stay put, paying their bills and living obliviously to the drops in home prices. Of those five million sales last year, about one third were distressed sales.
Currently, there are 3.87 million homes on the market. In April, distressed homes were 37 percent of sales (24 percent foreclosures and 13 percent short sales). And 7 percent of new listings were foreclosures, but they've been entering the pipeline at a steady pace and selling quickly at bargain prices, says the National Association of Realtors.
Of course, scary Case-Shiller numbers are nothing new. Since last June, when a yearlong rebound in prices began to sputter out, the index has recorded losses every month. If there's a bright spot, it's that in the last quarterly report, all 20 cities tracked showed declines; in the most recent index, two of the 20 actually showed month-over-month improvement.
And for the record, the experts back in December offered the same explanations as did the experts commenting on this week's report: The large number of foreclosures on the market and the expiration of the federal homebuyer tax credit are pushing prices down.
I'd throw in an even larger reason that the experts gloss over: Lenders aren't lending money to even qualified buyers. They have imposed unrealistic standards for those applying for and then wonder where all the buyers are. Maybe they should look for them under the mountains of paperwork that they keep demanding and misplacing. Seriously, has anyone tried to get so much as a refinance lately?
NAR says, albeit more politely than I do, that "the recovery is uneven, held back by unnecessarily tight credit." The association projects that "if the lending community simply returned to the safe, sound standards that were in place a decade ago (before the lax standards that led to the unprecedented boom-and-bust cycle), home sales would rise 15 to 20 percent over current projections." Now wouldn't that be nice?
These AOL Real Estateguides can help, no matter whether you choose to buy or sell:
- First-Time Homebuyer's Guide
- How to Shop for Your First Home
- How to Price a Home to Sell Fast
- How to Get a Low Mortgage Rate
More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.