While waiting for the announcement on Monday for this year’s Nobel prize in economics, I have this Bob Shiller interview to recommend:
Atlanta, Charlotte, Boston, Denver and Dallas were the cities that fared relatively well when the US housing bubble went bust: housing prices in these cities, until 2010, had only declined 10-20%, much better than the 50% average price drop in cities like Phoenix, Miami and Las Vegas.
But the recent price trend is worrisome: prices in these markets started to decline, sometimes at a faster pace than national average. The extreme example is Atlanta. Last year, the price in the southern city dropped 12%, the largest yearly drop among all major cities. (see the dynamic chart below, from NYT).
It remains to be seen whether the price dropping in these cities will pick up and eventually catch up with the national average. The key focus lies on how soon the labor market is likely to recover. Without jobs and robust income growth, more people will be forced out their homes, which will lead to another round of price decline.
Folks at CalculatedRisk also have a very nice chart showing the cumulative housing price declines by cities.
The latest housing price, as captured by the Case-Shiller Index, continued to fall in October. Here are two sharp charts from Calculated Risk.
Time trend:
Accumulated price fall by major US cities:
Combined with latest sales figure, the inventory of existing home sale, after a faked jump due to government’s incentive program, seemed starting to move again. However, the new home sale is still very much depressed.
According to PNC’s Stuart Hoffman, 2012 will be a transition year for the housing market. The hope is that the gradual fall of the housing price may eventually clear the inventory, six years after the last housing peak.
If the economy turns weaker in 2012, the Fed may eventually be forced to buy more mortgage-backed securities. However, the likelihood of any household debt relief program is dim, considering the current fiscal situation. In 2012, we are likely to see a continued muted growth in the US. Now people began to appreciate the importance of housing in driving business cycles. Without robust recovery in US housing market, any talk of V-shaped recovery only sounds foolish.
Do you feel everything is progressing in China? Or rather China is like a fast car without a reverse gear, destined to crash?
Watch this interesting video analysis, featuring Michael Pettis.
(video courtesy of Journeymanpictures)
Agent-based modeling of housing market and macroeconomy, explained by Doyne Farmer:
