Tuesday, December 30, 2008

Ben Bernanke versus the Housing Market

Ben Bernanke continues to print money while home prices continue to drop. According to the S&P/Case-Shiller home-price indexes, As of October, the 10-city index is down 25% from its mid-2006 peak and the 20-city is down 23% with home prices in the Sun Belt continuing to be hit hardest. The drop marks the 10-city index's 13th straight monthly report of a record decline. In 20 major metropolitan areas, home prices dropped 18% from the prior year, also a record, and 2.2% from September.

"The bear market continues; home prices are back to their March 2004 levels," said David M. Blitzer, chairman of S&P's index committee. He added that both composite indexes and 14 of the 20 metropolitan areas are reporting new record declines.

Three of the metro areas have given back, on average, more than 30% of the value of homes since October of last year. Phoenix remains the weakest market, reporting an annual decline of 32.7%, followed by Las Vegas, down 31.7%, and San Francisco down 31.0%. Miami, Los Angeles, and San Diego were close behind with annual declines of 29.0%, 27.9% and 26.7%, respectively.

Bernanke's outrageous money printing will reverse this trend much sooner than most expect, before the end of the first half of 2009.

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