US housing is now undervalued

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WASHINGTON (MarketWatch) - The U.S. housing market is now slightly undervalued after rapid price declines have overshot fundamentals, economists for IHS Global Insight said Wednesday.

House prices fell at a 6.9% annual pace nationwide in the third quarter, with prices falling in 241 of 330 metropolitan areas. Prices are down 6.5% from their peak in 2007.

Compared with their long-term fundamental values, U.S. homes are now 3.8% undervalued, the economists said.

"With no end in sight to the downward spiral of house prices, it is likely that the long-anticipated market correction will now overshoot fundamental valuations on the downside," said James Diffley, head of regional economics at Global Insight.

http://www.marketwatch.com/news/story/Home...8-4EAFF46B4B97}

[alienlovechild 75]

"With no end in sight to the downward spiral of house prices, it is likely that the long-anticipated market correction will now overshoot fundamental valuations on the downside," said James Diffley, head of regional economics at Global Insight.

The market value of homes should swing as far downward as did upward but I don't see that happening. Where were all these bright economists when the government backed sub-prime loans and people were in a feeding frenzy to jack up the price of homes and encouraging people to take out home equity loans?

How come stories like these don't emphasize that lower home prices are good for those who couldn't or wouldn't buy a home at an inflated price earlier?

[LorriQ 0]

And for those of us in the gulf states who HAD to purchase after Hurricane Katrina - well, we're just screwed anyway! LOL!

Market goes up and down all the time - realtors are saying the slump will prob last 2-3 years. This is good news for first time buyers and people looking to buy affordable housing in unaffordable markets. For the rest of us.......we'll have to wait and see if the predictions are right!

[Heracles 417]

Prices will go up but Realtors are living in lala land if they think the rates will return to 2006 rates within the next five years.

[LorriQ 0]

Prices will go up but Realtors are living in lala land if they think the rates will return to 2006 rates within the next five years.

Especially around here!