During the Great Depression years between 1928 and 1933, home prices fell 25.9 percent. The modern housing market just passed that mark. Indeed, home prices have fallen 26 percent since their peak in June of 2006 through November of 2010 (the most recent numbers available).
The housing market has fallen for 4½ years straight (53 months), and the bad news is probably going to get worse – much worse – before it gets any better. That’s because a temporary moratorium on bank repossessions after the so-called “robo-signing” foreclosure scandal will likely get lifted soon. That act alone will pour a glut of more than 2.5 million houses onto the market.
RealtyTrac’s Rick Sharga tells CNBC those 2.5 million houses should have went on the market last year. Instead, they’ll be freed up in 2011 in addition any new houses that get completed this spring and summer. That means the 53-month trend of falling housing prices isn’t going to slow down anytime soon. That’s good news for home buyers and bad news for housing companies.
This could all dampen growth in the wider economy at large by decreasing home equity loans as more and more homeowners slip underwater and potentially walk away from their mortgages. The only light at the end of the tunnel? The fact that the Great Depression housing market started showing signs of improvement after five years. We’ll reach the five-year mark this June, and it’ll be interesting to see where we head from there. Judging by the numbers, though, we’re a long way from home free.
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