Home Values & Housing Market Cross Into Depression Territory – Even the White House Has Dropped $80 Million in Value
Posted By Vicki McClure Davidson on January 12, 2011
Depression Territory: Home values have fallen 26 percent since peak in June 2006
The economic situation, housing market, and unemployment in America has been horrific for quite a while — but none had ever quite reached what is termed “Depression” territory.
That’s now changed. The housing market just crossed into the “Depression Zone.” We’ve not quite entered into the bleak world described in John Steinbeck’s controversial The Grapes of Wrath, but it is alarming that home values have now fallen more than they did during America’s Great Depression era of the late 1920s through the mid 1930s.
From CNBC News, Housing Market Slips Into Depression Territory:
In the past few years, we’ve all been careful to choose our words carefully, not calling it a recession until it fit the technical definition and avoiding any inappropriate use of the “D” word — Depression.
Things were bad but the broader economy never reached Depression territory. The housing market, on the other hand, just crossed that threshold.
Home values have fallen 26 percent since their peak in June 2006, worse than the 25.9-percent decline seen during the Depression years between 1928 and 1933, Zillow reported.
November marked the 53rd consecutive month (4½ years) that home values have fallen.
What’s worse, it’s not over yet: Home values are expected to continue to slide as inventories pile up, and likely won’t recover until the job market improves.
And while the president is physically protected in an emergency, whisked to a bunker at an undisclosed location, the actual White House is not: The value of 1600 Pennsylvania Avenue has dropped by $80 million, or nearly 25 percent since the peak of the housing boom. It’s current value is $251.6 million, according to Zillow, down from $331.5 million.
The White House has dropped in value by nearly 25 percent in the past few years, losing $80 million in value
From Zillow Blog, Home Value Declines Surpass Those of Great Depression:
Along with the snow and cold, November brought continued declines in home values. In fact, the Zillow Home Value Index has now fallen 26% since its peak in June 2006. That’s more than the 25.9% decline in the Depression-era years between 1928 and 1933.
November marked the 53rd consecutive month of home value declines, with the Zillow Home Value Index (ZHVI) falling 0.8% from October to November, and falling 5.1% year-over-year.
Housing Values: November marked 53rd consecutive month of home value declines
From Boston Globe/Boston Real Estate, Declining home prices beat Great Depression mark:
Home values have now fallen 26.1 percent from their peak in the bubble years, according to the Zillow Home Value Index. That beats the Great Depression decline of 25.9 percent.
We apparently crossed the threshold back in November – I wrote about this previously as prices edged towards that 1930s precipice.
Of course, this may be more of a reflection of desperation out in Phoenix, Las Vegas or Miami – while Greater Boston home prices have begun weakening again, we are still far from that Depression mark.
Still, often it’s where you are headed that counts – and prices even here in the seemingly charmed Boston area have been unable to escape the larger, downward pull of a still very sick national housing market. (Of course, foreclosures have temporarily slowed down, which may help, at least for the next few months – that is until the logjam clears and banks get back to business again.)
Before the latest numbers, Greater Boston, had fallen just 17 percent from its price peak in 2005. But prices, which had been on the rebound through 2009 and into early 2010, began to weaken again when sales collapsed with the end of the home buyer tax credit last spring.
Now we are officially into negative territory again – Zillow’s November median home value of $317,400 was down 1.1 percent from November 2009 and nearly 3 percent on a quarter-over- quarter basis.
Comparison of presidents and unemployment:
US Unemployment Rate Comparison by President chart, through November 2010
Excerpt from Thomas Del Beccaro’s Big Government analysis of America’s economy — here’s a portion… Why The Economy Won’t Come Back For Obama:
The Media is aflutter these days about the imminent return of the economy. Of course, it marks a stark contrast to the manner in which they covered the Bush economy. In the months leading up to the 2008 election, the Media was talking the economy down. Now they are attempting to talk it up. No amount of Media optimism, however, will change some basic dynamics which will keep the economy in its weakened state or worse for years to come. As you go through these reasons, keep in mind that consumer spending makes up, and has for years, approximately 70% of the US economy.
1. Historically High Unemployment. The unemployment rate remains historically very high. History also tells us that unemployment takes longer to recover than other economic indicators. That certainly applies to our current economic troubles. Despite Pelosi’s claims about how unemployment checks create jobs, the magnitude of our unemployment translates directly into a historically high lack of consumer purchasing power. That’s true for the 9.8% of unemployed Americans and their families – not to mention those affected by the much higher underemployment rate of 17+% – and those dependent on consumers. No one expects unemployment to fall rapidly and therefore this will continue to hurt the US economy for years.
2. The Foreclosure/Mortgage Crisis. The magnitude of the continuing foreclosure/mortgage crisis continues to be grossly under-reported by the press. (Surprise). Many believe that foreclosures will actually increase in 2011 over the approximately 1.2 million that occurred in 2010. Combined with the 2009 numbers, that means over 3 million foreclosures in a three year period. That depresses housing prices and hurts the housing industry overall which, historically, has led the way in past recoveries. Worse yet, estimates of the number of mortgages “under water,” (homes whose mortgage is higher than the value of the home) continues to rise – not to mention those homes which have less equity than the costs of sale.
Looking at it another way, the Federal Reserve believes Americans have lost $6 trillion in home equity since 2006. All of that translates into nervous homeowners with much lower – if not lost – purchasing power. That won’t turn around in time for Obama either given his policies.
3. Rising Gas Prices.
This too is a grossly under reported story. Gas prices are up over 60% under Obama. Higher gas prices act like a tax on the American economy that hurts consumers and businesses alike. Obama’s policies (like shutting down gulf oil production resulting in an 11% drop in supply) are certainly to blame and some are predicting gas shortages and $5 dollar a gallon prices by 2012. That too robs Americans of purchasing power.
Click here to read the rest.
About the author
Comments