NEW YORK (MainStreet) -- With home values in decline, down about 29% since 2006 according to Zillow.com, you might think that affordability alone would make the housing market a good bet. But it isn’t. And that is weird.
When the price of most commodities goes down, like gasoline or oranges, the tendency is that consumers buy up more of those commodities. But that hasn’t happened in the U.S. housing sector.
Even though housing prices, on average, have fallen almost by one-third in the past five years, housing purchases just haven’t budged.
Pending home sales were down by 4.6% in September, according to Realtor.org, while existing homes sales fell by 3.0% (although sales for the year in both categories are up moderately for the year). That’s been the case for most years during the Great Recession, as sellers outnumber buyers.
But as any homebuyer could tell you, its not easy getting credit for a $500,000 home – or even a $300,000 home. In addition, high unemployment has made buyers nervous. Few consumers want to take on a massive new source of debt when they’re uncertain about their job prospects. In addition, consumers don’t want to buy a home that may not appreciate in value all that much during the next 10 years.
But affordability may finally help get some homes off the market, albeit at a slower pace than homeowners and real estate professionals might like. New numbers from Fiserv Case-Shiller show that lower home prices may finally be triggering “price stability” in the U.S. housing market.