No surprises here for those who have followed my writings over the last few years about the housing market.
Today, Zillow released data about home prices in the first quarter and in March. They estimate that 55% of Atlanta metro area mortgages have negative equity and that prices are now at 1999 levels after declining 17% year-over-year. A WSJ piece notes that the quarterly national decline was the steepest since 2008. From that piece:
While most economists expected sales to decline after tax credits expired, the drag on the market has been greater than many anticipated. “We expected December and January to be bad” as the market reeled from the after-effects of the tax credit, said Stan Humphries, Zillow’s chief economist. But monthly declines for February and March were “really staggering,” he said. They indicate “a reflection of the true underlying demand, which is now apparent because most of the tax credit is out of the system, and it’s being completely overwhelmed by supply.”
I still don’t know what data some people were looking at when they formulated the more optimistic scenarios.
From Brett Arends’ Roi at Marketwatch:
What a foolish boondoggle those tax breaks for home buyers have turned out to be. The government spent an estimated $22 billion between 2008 and 2010 on tax breaks to prop up the housing market. All it achieved was a brief suckersâ€™ rally that ended last summer.
â€œAs we said at the time, it was a giant waste of money,â€ says Mark Calabria, economist at the conservative Cato Institute. â€œNone of these things really turned the housing market around. They just put off the adjustment for awhile.â€
I wrote my own post mortem for the tax credits here.
In a post on Calculated Risk, there’s this elegant but disturbing graphic about Clear Capital’s data, which indicates that values nationally have already fallen back below the trough during the recession:
Meanwhile, I got my assessment today, which showed another steep yearly decline in the value of my own house. I’ll have more to say about that in an upcoming column or blog post.