Housing Prices Can Only Go Down

Recent economic data has shown South Ogden housing sales have been going down each month. In the spirit of this, I recently read this article from CNBC where economist Nouriel Roubini explains how our housing markets will take a double dip in the current recession.  See Here: http://www.cnbc.com/id/40828545/. 

The causes: First, the tax credits that were offered actually hurt the economy.  It took tons of houses off the market that would have been spread out over time.  What we ended up with was a huge boost in home sales and then a 30% drop once the tax credits expired.  Second, the mortgage foreclosure issue.  With the mortgage documentation issues and suspension of foreclosures we are actually slowing the sales of homes.   Once this is fixed and all of this supply hits the market, demand will drop.  Increase Supply, Drop Demand.  Housing prices will continue to drop because of this.              

Now not all of the this will mean our economy will take a double dip, but it surly won’t help at all.  At the end of the article Roubini said the following regarding a double dip recession:

"The eurozone shock, long-term structural deficits, and state and local governments [operating near] bankruptcy."

And, if homeowners begin walking away from their properties en masse, those negative trends might well pick up steam:

"12 million households are already in negative equity and 8 million more have an LTV btw 95 and 100%. Thus even a 5% fall in home price will push an extra 8 million in negative equity with risk of millions walking away from their home—i.e. jingle mail,"

Just some things to think as we think about our homes and the future of South Ogden.  Selling your home is going to get more and more difficult and your homes could continue to lose value.

Comments welcome...do you feel we are on the way up or could we be going down.