Triple-Dip Is Only Good for Ice Cream Cones

You hear economics talking about how the U.S. is on the edge of a “double-dip” recession? Well, in the housing market we’re beyond that. Now they’re talking about a “triple-dip” in home prices by the spring of 2012.

In case you haven’t had your fill of bad economic news, Clear Capital – which monitors the housing market on a nationwide basis – just made public its forecast for the next several months.

For the record, the second dip occurred last spring, but then the market improved in the warmer months, always the best time for home buying. Average prices showed modest increases, which made it easy to start getting optimistic again.

Now the Clear Capital forecast says by the end of this year, another dip could take home prices down 1.6 percent, and then the same decline for the following three months, for a total decline of 3.2 percent by next April. These may not be major drops, but for homeowners who have only a razor-thin margin in terms of being underwater on their mortgages, any decline is unwelcome.

Why is this happening, despite record low mortgage rates and home prices that are so low that buyers should be leaping at the opportunity to pick up bargains? It comes down to how buyers feel about the future. Consumers are pessimistic, seeing an economy that just won’t jolt back to life and unemployment rates that reflect the fact that tens of millions of Americans are either not working, have given up looking for a job, or are underemployed.

One thing to keep in mind, though, is that what Clear Capital is forecasting is a national average. Throughout the whole housing market tumble, North Texas has tended to be a stronger market than many others. Based on what we’ve seen locally, we think even if there is a national “triple-dip,” the North Texas market should be flat at worst.

But there’s still an elephant in the room that could throw all these numbers off, and not in a good way. We talked about it recently, and that is the pending wave of foreclosures, bottled up by lenders’ reluctance to move ahead with them until they fixed their processes following the robo-signing embarrassment a year ago. If all these postponed foreclosures hit at once, even Clear Capital’s numbers will look rosy. We can only hope that lenders take their time with this, since a glut of foreclosed homes in the market doesn’t benefit anyone.

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