CNBC Report on prices, nationally

ScottR · Chief Bottle Washer Joined: Feb 11, 2006 Posts: 332

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investment, that's the other side of it. it looked like housing prices were recovering. they rose for four straight months for july. that was according to the case shiller index. now, we haven't gotten case shiller for august and september, however, all the other indices are showing some weakening. cnbc's diana olick joins us from washington. are we looking at a potential now triple dip in housing? we absolutely are. home sales and prices are highly seasonal. prices always go up in the spring and summer and then dip in the fall, simply to the mix of homes that are selling. but in today's troubled market there are a lot of other factors weighing in. and it could be much more than just a change in the seasons. we believe that the foreclosure pipeline is going to pick up and that ultimately that's going to produce some more downward pressure in prices. so we're expecting a bottom in 2012. so we foresee more months where we'll see declining home values. now, home prices turned down in august, down .4% according to core logic. month to month. that includes sales of foreclosures and also short sales. it is a direct effect of banks ramping up the foereclosures after nearly a year of delays due to the robo signing foreclosure mess. month to month, prices were barely positive, up .1%. but they don't include sales of distressed properties which are a full third of the market. a lot of markets what you're finding is basically it's kind of a dumbbell market. you have got investors who are paying all cash and turning around and renting them out, or you've got fha buyers who are only paying 3% down and are buying them. those are largely first-time home buyers. so how low will home prices go? of course there are wide and varied predictions. we have from clear capital which does a rolling quarter, they say prices will be down 3.2% from now. analysts at jp morgan chase put out something they predict another 6% to 7% drop in home prices from here. that would be a 36% from the peak to the end of 2012. not good looking into the fall. diana, thank you. i think. so can the economy recover without a housing rebound? joining us with their thoughts, shari olson and lance roberts from, and lance, i don't think it's possible, is it? well, it's not, actually. if you go back in history, you have to lo have to look at the fact that building a new house is one of the largest multiplier on the economy. in other words, every dollar we pit into building -- put into building a home multiplies into hundreds of other jobs, from engineers to builders and landscapers. it has a big pass through in the economy. unfortunately with our economy right now, we're missing both of those. shari, isn't it a good thing that finally all of the foreclosures are coming to market? i mean, i understand the intent on the part of regulators when it came to them being so upset about robo signing, but what it did was it delayed, right? so now -- absolutely. don't we have to get through the foreclosures before we can get to the other side? yeah, of course. i mean, that's the necessary evil. it has been delayed for over a year. in terms of the overall economy, i mean, it's possible to have an economic recovery without housing, but we have three fundamentals we need to fix. number one, 15 to 20% of our jobs as lance said relate back to housing. that's about 5% or 6% of gdp normally. so we need to replace those jobs. number two, 75% of if average american's wealth came from their home. so now with a third of the people under water and $13 trillion in lost wealth, with eneed to fix that. then number three, the actual actually -- actual ability to spend came from borrowing. and frankly, even with the rates this low, we can't get loans. we need to fix the fundamentals. is it likely? i don't know. moses parted the red sea so anything is possible. you described the measurable effect, the multiplier effect of home buying. she's describing the immeasu immeasurable measure that could have a profound effect on the economy as well. right. one is the inability to obtain credit. if you wanted to buy a house right now it's very difficult to get qualified to buy the house. but more importantly, one thing that we have been watching here is the fact that you have very, very low household formation because of the weakness in the economy. college students are going to college, they're going back home to live wither that parents because they can't get a job. some of your highest unemployment in the country is between the ages of basically 20 and 30 years of age. so now you've got parents today strapped between taking care of their parents and their children. yeah, fall off in immigrants as well, because housing an construction was so dominant by a lot of immigrant workers as well. shari, bottom line, in the end, gdp when you look at the numbers, if housing was dragging it down, if we're at least bottoming or only falling 3% as opposed to the huge declines we saw before, doesn't necessarily drag down gdp from here, doesn't help it lift from here. you're right, you're right. shari, go ahead. word. until we fix those issues, until we allow the consumers confident enough to spend, they won't bo doie doing that and jot relates back to jobs as well. folks, thank you for your insights. a lot of up arrows for the