Like Sand Through the Hourglass, Your Home's Value is Going Away.

Honey, I shrank the house, and the bank account!

And I gotta say, I'm not so happy about it. This time of year when I think of a double dip, I want it to be ice cream.

After rebounding briefly last year, national home prices have sagged to another low in what housing experts and television's “talking heads” are calling an economic double dip.

Notwithstanding the Administration's rose colored glasses; and Presidential promises that things are “just about all better, and certainly on the right track”, home prices have fallen for the last 8 months. The Case-Shiller Home Price Index reveals that home prices in major metro areas are back to mid-2002 levels, with no end to the declines in sight.

The Home Price Index dropped 4.2 percent in the first quarter of 2011 after having fallen 3.6 percent in the final quarter of 2010.

Excess supply has persisted since the construction boom earlier last decade that culminated when home prices collapsed in 2006. We may be sitting on 9 to 10 months worth of housing supply. A normal market would have about five months of supply. There are not many people with the money or the ability to borrow enough money to buy a house. What we have is weak demand, and a lot of supply, and that probably means house prices will continue falling.

Also contributing to the excess supply is the large number of foreclosures in the real estate market. Last year, a record 2.9 million properties received foreclosure notices. New lending standards have gotten fairly tight. And on top of that, appraisers have to be careful how they appraise homes for mortgage loans. Especially if you're in an environment of falling prices. Banks are concerned that the collateral value in 16 months may not be what it is expected to be. Meaning if your new home loses value, the bank may not want it on their books as a loan they made.

Is there any good news in this weeks financial repolrts? Well, yes, and no. It's bad news as you watch the value of your house go down some more, but good news sensing that the end of the downward spiral is expected to bottom out in the 2^nd half of this year. It's bad news that the resale value of your house will not likely recover for some time, but good news that if you are planning to be in the house for 5 years or more, you will probably come out even, or maybe a little better than even.

Why, someday we may all look back at this and laugh.

And how about this, all the politicians seem to move to Washington, and Washington, D.C., was the only city in which home prices increased on a monthly and annual basis – by a modest 1.1 percent and 4.3 percent respectively. Why doesn't that surprise me?

While last year saw anemic signs of an economic recovery, the most recent data do not point to renewed gains. And many cities have seen both a drop in housing prices and high unemployment. Housing data is an important indicator of the health of the economy in part because homes are often the most important assets of most households.

Because home prices have effectively collapsed, peoples' net worth is in awful shape at the moment. It will take a lot to improve their balance sheets through saving and income growth. Personal incomes rose 0.4 percent in March while personal consumption rose by 0.4 percent, leaving the personal savings rate unchanged at 4.9 percent. But with the high unemployment, American consumers are not in great shape at all, and the increase in gas prices have not really helped them. Mark my words, these and only a few other topics will be the key talking points for the 2012 elections.

Dane Hahn is a real estate professional with Tarpon Coast Realty in Englewood, Sarasota and Boca Grande. He will answer your questions at dane.hahn@gmail.com, or by phone at 941-681-0312. You can see him on the web at http://www.myfloridahomesmls.com/danehahn