So, is it good or bad news that home prices have –as Bloomberg.com puts it–“dropped the most on record in the first quarter from a year earlier?”
Depends how you look at it.
On the one hand, the lower prices mean that some people who might not have been able to buy homes before can do so now. But, on the other hand, the continued fall in prices–especially in places such as California and Flordia–are the result of more and more foreclosed properties now available.
The National Association of Realtors is reporting today that the median prices fell 14 percent and went down in 134 of 152 metro area, says the Bloomberg posting.
Most experts agree that any true economic recovery will be built on the foundation of a revitalized–or at least, stabilized–real estate market.
For that to happen, though, we would have to start seeing a real upswing in the buying of homes that are not being sold off as toxic assests by banks. That does not appear to be happening as yet.
In order for that to occur, people will have to start feeling more secure about their economic future and, more important, banks and other lending institutions will have to start freeing up enough credit to encourage would-be home buyers to go after properties that are more expensive than the ones priced for fire sale.
Only then will we begin to see the building industry show new signs of life with a resultant uptick in new housing construction. Those are the homes that generate countless jobs for all sorts of contractors. The sale of existing, foreclosed homes does just about zero in that regard and contribute little, if at all, to a refreshing of the national economy.
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