Zillow + Trulia reports = good news?
With Zillow’s report that home values have plummeted by a third since the real estate peak and Trulia’s report that owning a home is more affordable than renting in most of the 50 largest cities in America, some analysts are saying good news is ahead.
It may be the search for a silver lining, but overall, most note that housing is struggling and uncertainty about unemployment and pending legislation makes forecasting difficult.
Concerns about housing
“There are several reasons to be concerned about housing at present,” economist Barry Ritholtz said. “First, any economic deterioration, especially a recession accompanied by further job losses, will start another leg down in Housing and an accompanying set of bank balance sheet problems. Second, many asset classes recovering from a Boom & Bust cycle do not simple revert to fair value but often careen wildly past it towards a deeply undervalued state. Third, following a debt crisis, consumers spend a decade or more deleveraging, and tend to downgrade purchases that involve taking on more credit — like a mortgage. Last, any former investor favorite that suffers a collapse can take a long time to recover investor confidence. Its been more than a decade since the dotcom bubble popped, and the Nasdaq at ~2,500 is still off its bubble highs by 50%.”
Proof that housing is struggling
Further, Ritholtz shared four charts that reveal why he and others are chiming in that silver linings are great, but housing is anything but sitting pretty:
