12 December 2009

The Trend in the Freddie Mac US Housing Price Index

I suspect that the US Treasury and the Fed will continue to monetize the decline in housing prices and the mortgage market. We may see an inflation so that this trend is never realized in nominal values. Ultimately, the government may bury most of the losses in a currency devaluation.

US Housing: Four More Years to Fall - Michael White

"The exhaustive Freddie Mac price index fell 2% nationwide in the 3rd quarter and analysis of its data predicts prices will continue to fall for the next four years.

While Freddie announced Tuesday that its purchase-only index has gained for the past two quarters, the “Classic Series” of the Conventional Mortgage Home Price Index, which includes refinance appraisals as well as purchase values, has fallen 9% from the high in June 2007 and 3.8% for this year.

The projections say homeowners have lost only $1 for every $3 they can expect to lose in the end.

The trends show values will fall for four years through September 2013. Readers should take this estimate as an educated guess. The estimate may have greater relevance than forecasts described in mainstream-media headlines which typically fail to place new data within a long-term trend..."