The Case-Shiller index for August came out this week–across the country they are showing year over year declines around 17%. While prices went down a percent in August, I expect that prices will continue to decline in September and October–and if all the apocalyptic chatter comes to fruition (or even some of it manifests in Q1) then it is likely most consumers will consider making any kind of big real estate purchases, keeping inventory up and driving prices further downward.
While there is some talk of economic stimulus to help increase consumer spending, it kind of seems like putting some duct tape on leak on one of those above ground swimming pools–eventually it is all going to give and everything is going to come spilling out–especially since consumer spending spending and people living above their means (maxing out their credit) is what got us in this mess to begin with. We are definitely headed towards a recession, which means opportunity for those who can figure out how to capitalize on it. I think undervalued real estate is one way, but there are lots of business plans (anything that helps people stretch their dollars) that could flourish in this kind of environment.
I have been watching home availability and inventory (albeit my observation is more anecdotal than fact) on RedFin, and home prices on Zillow, and it certainly seems like inventory is increasing and prices are headed downward. I keep thinking that I may want to buy another piece of real estate (thinking multifamily this time), but I am still holding tight on my planned time line of next summer (since it will take me that long to save enough to put down).
Here is the data digest from the Seattle PI blog:August’s CSI report released today has Seattle at 175.24, down 0.7% from July and down 9.64% from August 2007. The C-S Composite 10 Index is down 1.1% from July and down 21.5% from the previous August; the Composite 20 Index is down 1.0% and 19.9% respectively. Phoenix and Las Vegas are down 44% YOY. Los Angeles, 36%; San Diego 37%. Miami’s down 39%. Dallas and Charlotte are down less than 3%; Denver and Boston less than 5.