December 28, 2010

Low Housing Prices a Sign of Things to Come

The home sale prices that came out for October were lower than expected and prices will continue to decline into 2011, as there is simply too much excess inventory in the market, coupled with slow economic growth.

While there will be some gains in housing construction in order to match slight growth in the economy, it won’t be enough to truly improve the housing market. 

Unless non-construction employment grows in 2011, we are facing a negative year for housing prices, even if builders manage to provide more supply to the market.

Certain growth states with low taxes will win in the housing construction re-ignition in 2011.  But it is hard to imagine a renaissance of homebuilding in Detroit, Cleveland, or Buffalo.