CNBC is reporting (here) that the S&P Case-Shiller composite housing price index is continuing to decline and David Blitzer, the S&P 500 Index Committee Chairman, is predicting that a double-dip could be confirmed before Spring (video above).
Another CNBC stock analysts, Jim Cramer, is not so sure. He doesn't think the widely reported Case-Shiller index is the most reliable index since it only measures 20 cities (here). Data from the Federal Housing Finance Agency (FHFA), the National Association of Realtors (NAR), the U.S Census Bureau and the housing-related stocks seem to be telling a different story of housing market recovery.
Completing a reliability/validity analysis of all these data sources will get in the way of making my own forecasts. However, I am interested in the Midwest Condominium market and have used NAR data to make forecasts. If you're interested, you can read the report here.
The bottom line is that the Midwest condominium market is soft. Prices will continue to decline in 2011 even though sales will start moving back toward trend. From the graphic above, you can see that Midwest condo prices dropped about 10% during 2010. Since the U.S. housing bubble is thought to have peaked in 2005, we've had 3-5 years of downward pressure on prices on top of the steep decline in 2010. Prices at 10, 20 or even 30 percent below list are not unreasonable given the NAR data.
It's a great time to buy a condominium, but be forewarned: you will be unable to get a first mortgage on any condominium within a project that is still controlled by the developer. Fannie and Freddie simply will not, after the government takeover, repurchase these mortgages from banks (think of the Florida and Las Vegas condo markets and all the recently-started but vacant units).
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