Posted by Davy Bui on March 25th, 2008 in Market Commentary

The Wall Street Journal has a lengthy tome on US foreclosures[$] in today’s edition.  Here are a few points from it I’d like to add to yesterday’s post.

Ivy Zelman, probably the preeminent housing analyst in the US (see what a snarky Kool-Aid comment and being right all the time does for your reputation?), predicts that foreclosures will help drive down home prices for the next several years.

And this observation from Ms. Zelman’s old stomping grounds, Credit Suisse:

“The home-price index already has come down about 10% from its peak in mid-2006. But prices might need to fall much further, some analysts say. A recent Credit Suisse report projects that average home prices have another 40% to fall in the Miami metropolitan area, 36% in Phoenix, 26% in Los Angeles and 20% in Las Vegas if they are to become more in line with income levels.”

This would suggest that my observations in the Sacramento area, while not representative of the nation as a whole, is not  isolated and is widespread enough to impact the national economy.

So don’t believe the rosy headlines about Feb. existing home sales.  After all, it was the first rise since, oh, FEBRUARY 2007!  Imagine that — real estate is seasonal.

Wave of Foreclosures Drives Prices Lower, Lures Buyers [$]