Stocks are up but housing prices are down. While Wall Streeters are cheering that “The U.S. economy is back!” with the Dow, S&P, and the NASDAQ on the upswing, the housing market continues to sink.
As economist Robert Reich notes the upswing in the stock market is only good if you’re member of the elite 1% that owns half the stock traded on the market and part of the 9% that owns another 40%. Plus the recent turmoil in the Middle East has foreign investors “pushing more foreign money into the relatively safe and reliable American equities market.”
The average American isn’t a member of that club. For the average American the biggest investment they have are their homes and the housing market is a rumbling bear. That’s the real story about the economy.
According to the Wall Street Journal’s latest quarterly survey of housing-market conditions, home prices continue to drop. They’ve dropped in all of the 28 major metropolitan areas, compared to a year earlier. And remember how awful things were in the housing market a year ago! In fact, the size of the year-to-year price declines is larger than the previous quarter’s in all but three of the markets surveyed.
Home prices have dropped most in cities already hard hit by the housing bust – Miami, Orlando, Atlanta, Chicago. But declines increased in other markets that had before escaped most of the downdraft, such as Seattle and Portland.
Reich also points out that there are a record number of homeowners facing foreclosure, are seriously behind in their mortgage payments and the number of American’s owing more on their home than the home is worth is increasing. Many will just walk away which will further increase the foreclosures and weaken the housing market.
Low wages and unemployment also plague the economy. No, the American economy is not back, at least for the average American.
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