The US housing market has continued its process of double-dipping in 2011.
In the first quarter, prices fell 3 percent from the previous quarter, which is the steepest pace of decline since the height of the housing crisis in 2008, according to zillow.com.
Compared to the peak made in June 2006, US housing prices are now down by 29.5 percent.
Of all the metro areas tracked by zillow.com, Honolulu prices rose over last year and Pittsburgh prices remained unchanged. The rest all declined.
The metro areas showing the largest decline included Detroit and Atlanta.
The US housing market is the only major segment of the economy that’s double-dipping.
There are two major reasons for this:
One, it almost solely depends on the state of US consumers, which have not fared well in the aftermath of the Great Recession. Contrastingly, corporate profits have rebounded sharply because they could take advantage of the blistering growth in emerging market economies.
Two, it never ‘cleared.’ There is still a large shadow inventory of foreclosed homes that haven’t gone on the market yet.
Moreover, the many people who are stuck with mortgages they can’t pay and living in houses they cannot afford may add to that shadow inventory.
As of first quarter 2011, Zillow.com estimates that 28.4 percent of all single-family mortgages are underwater – these are the prime candidates to join shadow inventory.
Below are three illustrative charts about the US housing market from Zillow.com.