Housing prices have fallen for 6 straight months since The Obama Housing Bubble collapsed in September. Price trends did improve slightly from February, driven by the expiring $8,000 tax credit, but overall results were dismal.



Since September California has been the only resilient region of the country.  This is odd given that The Left Coast also remains the nation's most overvalued real estate.  San Diego is the single Case-Shiller market not to have faltered since September 2009, and both it and San Francisco appreciated by 1.5% during March.

The Midwest has not fared so well.  Chicago continues its freefall down 2.3% in March and 9.4% since September.  Detroit declined by 4.1% from February.

• Los Angeles and San Diego are the most overvalued components of the index requiring a 40.7% and 38.6% decline from present levels to reach inflation-adjusted, pre-bubble price equilibrium

• The Case-Shiller 10 City Index needs to depreciate by another 31.6% to reach its inflation-adjusted, pre-bubble price equilibrium

• 6 markets have now fallen below inflation-adjusted 1997 price levels.  Detroit would have to appreciate by 59.9% to return to its pre-bubble valuation 

(Explanation of Methodology) 




The only reason the national price collapse did not accelerate for an 8th straight month in March is that the expiring $8,000 tax credit created artificial demand.  Now that the incentive is gone, demand will again disappear.  April's housing price figures will be largely irrelevant as they capture the nadir of the homebuying distortion.  It is the May index results which will provide a clean gauge of the housing market's health and indicate whether the summer home buying season will be a boom or bust.  Given my expectation of a dramatic decline in artificial demand, I expect a bust.