Another Drop in Housing Prices

The S&P's Case-Shiller Home Price Indices came out today. In summary: There was "further deceleration" in U.S. home prices in January and overall, the market is "off to a dismal start in 2011," according to the latest S&P/Case-Schiller Home Price Index.

"10-City Composite was down 2.0% and the 20-City Composite fell 3.1% from their January 2010 levels. San Diego and Washington, D.C., were the only two markets to record positive year-over-year changes. However, San Diego was up a scant 0.1%, while Washington DC posted a healthier +3.6% annual growth rate."

Is this sustained drop in home prices due, in part, to a fundamental shift in how people think about buying a home? I suspect so. Many people think that renting can work just fine. Eventually, people will start buying but with more emphasis on quality-of-life factors than purely financial or investment ones.

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