by CalculatedRisk on 4/03/2012
Several people have sent me this Bloomberg article by Kathleen Howley: Home Prices Seen Dropping 10% in U.S. on Foreclosures: Mortgages
From the second paragraph:
Sales of repossessed properties probably will rise 25 percent this year from 1 million in 2011, according to Moody’s Analytics Inc. Prices for the homes could drop as much as 10 percent because they deteriorated as they were held in reserve during investigations by state officials resolved in February, according to RealtyTrac Inc.
So RealtyTrac is saying prices for some repossessed properties could fall 10 percent “because they deteriorated” while in the foreclosure process. That sounds correct, but that isn’t overall prices.
Later in the article, Howley does quote an economist predicting a further 5% to 10% price decline this year:
The [Case-Shiller Composite 20] index probably will fall 5 percent to 10 percent this year, a range that depends on the condition of the mothballed homes, [Patrick Newport, an economist at IHS Global Insight] said.
That compares with a forecast for a 2.9 percent decline by Celia Chen, a housing economist at Moody’s Analytics in West Chester, Pennsylvania, and a prediction of a 3.9 percent decline by Diane Swonk, chief economist of Mesirow Financial Inc. in Chicago.
An added thought: The most recent Case-Shiller report was for January. If the Composite 20 index fell as much from January through March as in 2011, prices are already down 3% this year as of the end of March (Compare that to Celia Chen and Diane Swonk’s predictions for the year).