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Case-Schiller Index Hasn't Bottomed Yet

The March 2010 Case Schiller Index was released recently and the new report shows that US Real Estate markets may still have some ways to slide.  I've been predicting for some time that before too much longer we'll see the majority of markets in the 20 city index in the 90 to 110 range with the 20 City Index Composite figure sitting in the low 120s.  At present only 4 markets in the 20 city index show figures within that range (5 if you count Detroit which is the statistical outlier at 67.66).  An additional 5 markets listed in the index are currently in the 110 to 120 range, and those elements are likely to fall below the 110 threshold when July figures (unaffected by the Federal home-buyer stimulus) are released.  Tampa-currently sitting at 136.46, seems buoyed by what I called the "North of Sarasota Effect", a phenomenon in Florida Real Estate where everything north of Rte 72 seems to have held far more value than communities south of that dividing line.  Eventually one should effect the Sarasota Effect to diminish as unemployment rates of 10 to 12 percent in those communities eventually drag property values down further. 

There is absolutely no way that Real Estate markets can recover in the near term.  With unemployment at 10%, incomes and hours stagnant and growing numbers of homes in various stages of default and foreclosure, to expect a resurgence in Real Estate is akin to expecting a strong comeback for General Motors based on the strength of the Saturn product line.  The market is over-saturated with supply, and demand seems unlikely to increase until the unemployment rate falls below the 7% range.  




Disclosure: no positions