The November Case Schiller report on housing was released this morning and indicates that there have been price declines in Portland and Seattle housing and housing prices will likely decline further in the coming months. But on a positive note however is that the rate of decline seems to have slowed and remains consistent with the other cities in the index. Here is link from Bloomberg with a radio interview with Professor Karl Case discussing the latest Case Schiller index and the outlook for 2011. While Professor Case suggest that housing will prices will remain flat “for some time.”
Coupling the price declines with a slowdown in the annual rate of housing starts which fell to 519,000 for this year, mostly due to a 44% percent decline in multi-family starts versus only a 1.1% decline in single family starts, this seems to indicate that there is still not a lot of faith in consumers to make a house purchase at this time. In an article earlier this year, I suggested that housing starts should have been robust by the third and fourth quarters of this year should the economy be improving. But clearly I was wrong. The job market has not improved enough to have buyers return to the market. And the home buying tax credit seems now to only have accelerated purchases that might have occurred anyways. As I noted in my article however, if the annual rate of housing starts remains this woefully low we will be headed for a severe housing shortage in the future. In some ways this seems counter intuitive to what we see going on in the market, but eventually our natural population growth coupled with population growth from immigration will drive the need for additional housing. And the current annual housing start does not appear to be keeping pace with demographics.