Home prices stabilized, but...

[phk]

The S&P/Case-Shiller home price indices registered another month of increase in July.

That's a critical bit of favorable news, since continued declines in home prices would mean further increases in default rates and new stresses on financial institutions.

On the other hand, the decline in existing home sales for August, future rise in foreclosures already baked in the cake, inventory of unsold homes, and expected continuing increases in unemployment all raise the possibility that house prices could resume their descent.

As pointed out by earlier posters, the fat lady ain't singin yet.

[Southern Senator North Carolina Yankee]

It still has to descend a few more percent. Then Housing will stagnant and stay flat till long after the economy recovers and will follow the recovery. Once it starts growing you will be lucky to get 4% a year growth in housing prices. You definately won't see what we had 2001-2006, hopefully ever again. Once Unemployement is back around 7% and falling and Housing prices are about $130,000-$150,000 we can begin to increase the number of home owners as a percentage of the population again. Hopefully this time though people won't view it as a substitute for saving and a retirement fund. Also, hopefully people won't take loans they can't afford either.

[phk]

It still has to descend a few more percent. Then Housing will stagnant and stay flat till long after the economy recovers and will follow the recovery. Once it starts growing you will be lucky to get 4% a year growth in housing prices. You definately won't see what we had 2001-2006, hopefully ever again. Once Unemployement is back around 7% and falling and Housing prices are about $130,000-$150,000 we can begin to increase the number of home owners as a percentage of the population again. Hopefully this time though people won't view it as a substitute for saving and a retirement fund. Also, hopefully people won't take loans they can't afford either.

A return to 2000-2002 nominal prices would seem like the best one could hope for in the short run.

My guess is that asset prices will hold there for a while and then really collapse during the boomer liquidation phase in 2020-2030, while perhaps the younger millennials will balance this trend.

[CARLHAYDEN]

The S&P/Case-Shiller home price indices registered another month of increase in July.

That's a critical bit of favorable news, since continued declines in home prices would mean further increases in default rates and new stresses on financial institutions.

On the other hand, the decline in existing home sales for August, future rise in foreclosures already baked in the cake, inventory of unsold homes, and expected continuing increases in unemployment all raise the possibility that house prices could resume their descent.

As pointed out by earlier posters, the fat lady ain't singin yet.

In inventory of foreclosed (and pending foreclosures) is very high because the banks (at the urging of the feds) are keeping properties off the market.

They cannot keep those properties off the market much longer without more cash infusions from the government.