Tags: Whalen | housing | market | deteriorating

Chris Whalen: Housing Market Deteriorating

By    |   Wednesday, 12 Mar 2014 08:00 AM

The U.S. housing market isn't in good shape, says financial author and investment banker Chris Whalen.

"While many parts of the U.S. economy are growing, the housing sector is increasingly a drag on consumption and job creation," he writes in the American Banker.

Most indicators show home price increases are slowing significantly, with a few hot markets accounting for most of the upward momentum, Whalen says. Only six cities registered price gains in December, according to the S&P/Case-Shiller index.

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"Home prices probably peaked overall in the second quarter of 2013, but the time delay in most of the major data series on housing masks this reality," Whalen writes.

"While average home prices have returned to 2004 levels, 20 to 30 percent of American homeowners remain either underwater on their mortgages or have too little equity to sell their homes."

Even Nobel laureate economist Robert Shiller of Yale University, co-founder of the 20-city housing-price index, has recently warned about the housing market.

"There are pitfalls ahead," Shiller told CNBC. "I think, though, that at this point they [home prices] are going up pretty fast. My instinct is that this momentum will dissipate, but we won't see a reversal this year. I think it will still be up."

Home prices will likely rise early in the year "at a fairly good pace," Shiller said. "But I think they may weaken. There are a lot of signs showing that the housing market is weakening."

Meanwhile, applications for home mortgages, stand at their lowest levels in more than a decade.

"While many observers blame rising interest rates for the paucity of new loan applications, factors such as a poor job market, flat to down consumer income and excessive regulation are probably more important," Whalen writes.

Others cite weakness in the housing market too. While weather is wreaking havoc with the industry, tight credit, rising prices and mortgage rates and limited inventory are hurting too, Lawrence Yun, chief economist of the National Association of Realtors, told USA Today.

"These issues will hinder home sales activity" until stronger job growth boosts demand and supply increases, he said.

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The U.S. housing market isn't in good shape, says financial author and investment banker Chris Whalen.
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2014-00-12
Wednesday, 12 Mar 2014 08:00 AM
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