According to press reports, home prices dropped for the fifth consecutive month in January, reaching their lowest point since the end of 2002.
The average home sold in that month lost 0.8 percent of its value, compared with a month earlier, and prices were down 3.8 percent from 12 months earlier, according to the S&P/Case-Shiller home price index of 20 major markets.
Home prices have fallen a staggering 34.4 percent from the peak set in July 2006.
“Despite some positive economic signs, home prices continued to drop,” said David Blitzer, spokesman for S&P. “Eight cities — Atlanta, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa — made new lows.”
This development comes in the wake of 2011, the worst sales year on record for housing. The housing crisis is now worse than the Great Depression. And the home ownership rate (59.7 percent) is the lowest since 1965.
All of this matters a great deal because housing is the biggest asset many people have. For most people, buying a house will be the biggest investment they make; more of their wealth is locked up in housing than any other investment. And so a large contraction of wealth and people’s net worth – with home prices dropping more than a third in the last five years – has tremendous ripple effects, including on consumption.
So long as the housing market is this sick, the economic recovery will be, at best, fragile.
This is not the kind of record Barack Obama wants to defend; but it’s one the Republican nominee, if he’s wise, will force the president to defend. Because while it’s true the housing collapse didn’t start on Obama’s watch, it’s just as true he’s done nothing to reverse the collapse. Like in so many other areas, the housing situation has gotten worse, not better, under Barack Obama’s stewardship. The GOP rallying cry this year might consist of only two words: Had Enough?