Three real estate summaries released this week, including the CoreLogic Negative Amortization Report and the S&P Case-Shiller Home Price Index, left me with a poor impression of the real estate 2012 outlook. And as usual, providing personal finance advice, real estate advice and consumer advice on the Ilyce Glink Show March 4, 2012 on WSB Radio.
Ben Bernanke, the chairman of the Federal Reserve claims to see modest improvements in the economy. The stock market has been flirting with 13,000 and it’s a good time for Dow investment. GDP growth for 2011 topped three percent and the unemployment rate is down. All of this is good.
However, three different real estate reports that hit my inbox this week have made me a little nervous for our national economic prospects all over again:
- CoreLogic Negative Amortization Report – In the fourth quarter of 2011, fully 28 percent of all residential homeowners were underwater with their mortgage loans. This means homeowners are experiencing negative or no equity (less than five percent). In addition, mortgage debt rose to three trillion dollars during the same period.
- S&P Case-Shiller Home Price Index – Home values have fallen 13 percent since December 2010 and continue to decline.
- Foreclosures still account for 24 percent of all home sales, and that figure doesn’t even include short sales. There are more foreclosures coming which in turn will lower home values further. It’s a vicious circle (see #2, then #3).
Folks, how do we dig out of this hole in the housing market? What can be the real estate 2012 outlook with this confluence of bad news?
Real estate was the cornerstone of growing wealth for generations. America has NEVER come out of a recession where growth and investment in the housing market was not a tent pole. And with property prices still falling like a blue light special at Sam’s Club how can we feel secure? Also keep in mind that unlike other investments the purchase of a home creates emotional ties.
I’m worried. What do you think?
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