There is hardly any legitimate research that shows an improvement in the US housing market. That was confirmed again today as real estate website Zillow released its first quarter analysis.
The introduction to the report was unusually depressing even in this period of a calamity of real estate prices and foreclosure rates: “As much as we were hoping to have better news to share this quarter, homes continued to lose value. In fact, home values fell at a pace we haven’t seen since 2008 — the darkest days of the housing recession.”
Zillow reported that US housing prices dropped 3% in the first quarter. The company said it has cut back its forecasts for the balance of the year. “We now believe a bottom will come in 2012, at the earliest.” Zillow also reported that mortgages for 28.4% of single family homes were underwater. Its measurements also show home prices down to 2004 levels.
Home owners and economists have still not found anywhere to turn to solve the real estate problem. No single financial firm, or state, or home construction company can fix the trouble.
As always. the solution of last resort is the federal government which is beset by the issues of the national deficit and nation debt, the ceiling of which some members of Congress are reluctant to raise. Washington has already begun to shut down some social assistance programs. The odds that Congress will extend unemployment benefits again have dropped although more than 13 million Americans are without jobs.
The federal problems mean that home tax credits, which supported the home market a year ago, will not be reinstated. The HAMP attempt to help those who might face foreclosure issues was a failure. Plans to get banks to reset principles on homes have had no success. Washington has spent all the bullets it has to attack the problem, and that means the problem will persist for a long time, perhaps years.
The housing problem may be the single best example of the effects of the new austerity which is favored by Congress. Politicians are willing to reject practical solutions to even the most severe problems, if they cost a great deal of money to solve.
The trouble that the federal government would probably have taken on just a few years ago is trouble that it chooses to turn its back on now, and perhaps for good reason. But, the housing problem is more that one problem. Home values ripple throughout the economy which makes them as dangerous a financial issue as any other.
Douglas A. McIntyre
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