Embracing Good Debt in Real Estate: A Smart Investor's Guide to Building Wealth

Building Wealth Using Good Debt

Embracing Good Debt in Real Estate: A Smart Investor's Guide to Building Wealth

Are you intrigued by the potential of real estate investing but hesitant about taking on debt? You're not alone. Many people shy away from using debt in real estate because they associate it with risk and financial strain. However, understanding the concept of good debt can be a game-changer for your financial future. Let’s explore why leveraging debt in real estate investments can be a powerful wealth-building strategy—and how to do it wisely.

Why Does Using Debt in Real Estate Scare Most People?

The fear of debt is deeply ingrained in many of us. We’ve been taught that debt is risky and should be avoided. But not all debt is created equal. Here’s why the idea of using debt in real estate often scares people:

• Fear of Financial Burden: The thought of owing money can feel overwhelming.
• Concerns About Market Volatility: Fluctuations in property values can make investors nervous.
• Lack of Understanding About Leverage: Many don’t realize how borrowing can amplify returns.
• Worry About Potential Foreclosure: The risk of losing a property looms large for some.
• Misconceptions About “Good Debt” vs. “Bad Debt”: Not all borrowing is harmful—some debt can actually build wealth.

Understanding Good Debt in Real Estate

Good debt is an investment that has the potential to increase your net worth or generate long-term income. When used strategically, real estate debt often falls into this category. Here’s why:

Leverage: The Power Multiplier

Leverage allows you to control a larger asset with a smaller initial investment. In real estate, this means you can purchase properties worth much more than your available cash, potentially amplifying your returns. For example, putting down 20% on a $500,000 property gives you control of the entire asset, and any appreciation applies to the full value—not just your initial investment.

Cash Flow Potential

Rental properties can provide consistent passive income, helping to cover mortgage payments and expenses while potentially leaving you with positive cash flow. This steady income stream can reduce financial stress and improve your overall return on investment.

Appreciation Over Time

Real estate typically appreciates over time, increasing your equity and net worth as you pay down the mortgage. But where does this appreciation come from? There are two key drivers:

• Inflation and Currency Debasement: As governments print more money, the purchasing power of the dollar decreases. This drives up the prices of tangible assets like real estate, which act as a hedge against inflation. For example, if you take out a $400,000 mortgage today, inflation ensures that those dollars become “cheaper” over time, meaning you’re effectively paying back the loan with dollars that are worth less in the future.
• Supply and Demand Dynamics: Population growth, urbanization, and limited land supply create upward pressure on property values. Even modest annual appreciation rates can lead to significant gains over the long term.

Here’s the math behind it: If you buy a property for $500,000 and it appreciates at just 3% annually, its value will grow to approximately $672,000 in 10 years. Meanwhile, the $400,000 mortgage you took out remains fixed (assuming a fixed-rate loan), meaning the real cost of your debt decreases over time due to inflation. This dynamic allows you to build wealth while reducing the burden of your loan.

Tax Benefits

Real estate investments offer numerous tax advantages, including deductions for mortgage interest, property taxes, and depreciation. These benefits can significantly improve your overall returns and reduce your taxable income.

Strategies for Using Debt Wisely in Real Estate

To harness the power of debt in real estate while minimizing risks, consider these strategies:

1. Conduct Thorough Due Diligence

Before investing, research local market conditions, economic trends, and property specifics. Thorough inspections and assessments can help identify potential issues early on, saving you from costly surprises later.

2. Diversify Your Real Estate Portfolio

Spread your investments across different types of properties and locations to minimize risk exposure. This strategy can help protect you from market downturns in specific areas and ensure a more stable income stream.

3. Maintain Adequate Cash Reserves

Always keep a financial cushion to cover unexpected expenses or periods of vacancy. This can help you avoid defaulting on your loans during challenging times and ensure your investments remain sustainable.

4. Choose the Right Financing Options

Explore various lending options and choose those that align with your investment goals. Fixed-rate mortgages can provide stability, while adjustable-rate mortgages might offer lower initial payments—each has its pros and cons depending on your strategy.

5. Focus on Cash Flow Positive Properties

Prioritize investments that generate positive cash flow from the start. This ensures that rental income covers your mortgage payments and other expenses, reducing financial strain and improving your overall returns.

6. Implement Effective Risk Management Strategies

Develop comprehensive safety plans, review contracts thoroughly, and maintain proper insurance coverage to protect your investments. A proactive approach to risk management can save you from costly mistakes.

The Six Pillars of Successful Real Estate Investing with Debt

1. Leverage: Use borrowed funds to amplify your returns with minimal upfront capital.
2. Cash Flow: Generate consistent rental income to cover expenses and build wealth.
3. Appreciation: Benefit from increasing property values over time.
4. Tax Benefits: Take advantage of various deductions to improve your overall returns.
5. Equity Build-Up: As you pay down your mortgage, you increase your ownership stake.
6. Inflation Hedge: Real estate often outpaces inflation, protecting your purchasing power.

Mitigating Risks When Using Debt in Real Estate

While using debt in real estate can be powerful, it’s crucial to manage risks effectively:

• Conduct Regular Market Analysis: Stay informed about local and national real estate trends to make data-driven decisions.
• Maintain Properties Diligently: Regular maintenance and upgrades can help preserve property value and attract quality tenants.
• Build a Strong Team: Surround yourself with experienced professionals, including real estate agents, property managers, and financial advisors.
• Plan for Market Fluctuations: Have contingency plans in place for potential market downturns or changes in your financial situation.

Conclusion: Embracing Good Debt for Real Estate Success

Using debt to invest in real estate doesn’t have to be scary. When approached with knowledge, strategy, and careful planning, it can be a powerful tool for building long-term wealth. By understanding the concept of good debt, implementing sound investment strategies, and effectively managing risks, you can leverage debt to create a robust real estate portfolio that generates passive income and builds equity over time.

Think of it this way: When you take on good debt backed by real property, you’re essentially betting on the value of tangible assets over the declining value of fiat currency. As inflation erodes the dollar’s purchasing power, your property’s value rises, and the real cost of your debt decreases. This creates a win-win scenario where your assets appreciate while your liabilities depreciate in real terms.

If you’re ready to take the next step toward financial independence, consider exploring how real estate can fit into your wealth-building strategy. Start by educating yourself on market trends, analyzing potential properties, and consulting with financial professionals to create a plan that aligns with your goals. Remember, the key to success lies in making informed decisions and embracing the power of good debt to secure your financial future.

The Power of Good Debt: Building Wealth Through Real Estate and Leverage

When most people think of debt, they associate it with stress, financial strain, and something to avoid at all costs. However, not all debt is bad. In fact, good debt—when used strategically—can be one of the most powerful tools for building wealth. 

By leveraging debt to acquire valuable assets like real estate, you can take advantage of tax benefits, hedge against inflation, and grow your net worth over time. Let’s dive into how good debt works, why it’s so effective in real estate, and how you can use it to achieve financial success.

What Is Good Debt?

Good debt is borrowing that helps you generate income or build long-term wealth. Unlike bad debt—such as high-interest credit card balances used for discretionary spending—good debt is tied to investments that appreciate in value or provide consistent cash flow. Examples include mortgages, business loans, and student loans for education that lead to higher earning potential.

In the context of real estate, good debt allows you to purchase properties that generate rental income or appreciate over time. For instance, taking out a mortgage to buy a rental property lets you use other people’s money (the bank’s or a private lender) to acquire an asset that grows in value while producing passive income. This is the essence of using debt wisely to build wealth.

The Role of Leverage in Real Estate

Leverage is the practice of using borrowed funds to amplify your purchasing power and investment returns. In real estate, leverage allows you to control a larger asset with a smaller initial investment. For example, by putting down 20% on a property and financing the remaining 80%, any appreciation in the property’s value applies to the total value—not just your initial investment.

Why Leverage Works So Well in Real Estate

• Increased Potential Returns: If a $500,000 property appreciates by 5% annually, that’s $25,000 in gains. With 20% down ($100,000), your return on investment is 25%, far higher than if you’d paid in cash.
• Diversification: Leverage enables you to invest in multiple properties instead of tying up all your capital in one asset.
• Cash Flow: Rental income from tenants can cover mortgage payments and other expenses while leaving you with positive cash flow.
• Tax Benefits: Mortgage interest and depreciation are often tax-deductible, reducing your taxable income.

By using leverage wisely, you can grow your real estate portfolio faster and build long-term wealth.

The Tax Advantages of Borrowing

One of the most overlooked benefits of good debt is its favorable tax treatment. When you borrow money to invest in real estate, you can take advantage of several tax-saving opportunities:

• Mortgage Interest Deduction: The interest paid on loans for investment properties is often tax-deductible, lowering your taxable income.
• Depreciation: You can deduct a portion of the property’s value each year as it "depreciates," even if its market value is rising.
• Capital Gains Tax Deferral: Strategies like 1031 exchanges allow you to defer taxes on profits when selling one property and reinvesting in another.

These tax advantages make real estate one of the most tax-efficient ways to build wealth over time.

Inflation and Currency Debasement: Your Secret Allies

Many people fear inflation because it erodes the purchasing power of money. However, for those who understand how to use good debt strategically, inflation can actually work in your favor.

How Inflation Helps Borrowers

• Fixed-Rate Loans Become Cheaper Over Time: If you lock in a mortgage at today’s rates, inflation reduces the real cost of those payments over time.
• Asset Appreciation Outpaces Inflation: Real estate tends to appreciate at or above the rate of inflation, preserving and growing your wealth.
• Debasement Benefits Borrowers: Fiat currency loses value over time due to government policies like money printing (COVID!). By borrowing money today to acquire appreciating assets, you’re effectively paying back loans with cheaper dollars tomorrow.

While many people seek security by saving money in bank accounts that lose value due to inflation, savvy investors borrow strategically to acquire assets that hedge against this very phenomenon.

Why Saving Money Isn’t Enough

Traditional financial advice encourages saving money as a path to security. But in a world where fiat currencies are constantly losing value due to inflation and debasement, saving alone won’t build wealth.

The Case Against Saving

• Savings accounts offer minimal interest rates that don’t keep up with inflation.
• Cash loses purchasing power over time.
• Saving delays wealth-building opportunities, as it takes longer to accumulate enough capital for investments.

Instead of focusing solely on saving money, consider borrowing strategically to acquire assets like real estate that grow in value and generate income.

Building Wealth Through Good Debt

To achieve financial freedom, it’s essential to shift your mindset from avoiding debt to embracing good debt as a tool for building wealth. Here’s how:

1. Identify Quality Assets: Focus on investments like real estate that appreciate over time and produce cash flow.
2. Borrow Strategically: Use fixed-rate loans with manageable terms to minimize risk.
3. Leverage Tax Benefits: Work with a tax professional to maximize deductions and minimize liabilities.
4. Hedge Against Inflation: Invest in assets that grow faster than inflation erodes currency value.
5. Think Long-Term: Wealth-building through good debt requires patience and discipline but pays off significantly over time.

Final Thoughts (Not Financial Advice)

Good debt is more than just borrowing—it’s about using leverage intelligently to acquire assets that build wealth while protecting against inflation and currency debasement. By shifting your focus from saving money to borrowing wisely, you can take control of your financial future.

However, this strategy isn’t without risks. Always conduct thorough research, consult financial professionals, and ensure your investments align with your risk tolerance and long-term goals.  This is important!

Remember: The goal isn’t just financial security—it’s financial freedom through smart borrowing and asset acquisition.

What Are Your Thoughts? Using good debt to build wealth through real estate isn’t a one-size-fits-all strategy. Everyone’s financial situation and goals are different. Have you used leverage to invest in real estate or other assets? What challenges or successes have you experienced? Share your thoughts, questions, or stories in the comments below—we’d love to hear from you!

Residential Real Estate Market Update: February 2025

The real estate market in early 2025 is shaping up to be a mix of opportunities and challenges. With mortgage rates still elevated, home prices continuing their gradual rise, and inventory levels shifting, both buyers and sellers need to stay informed. Let’s dive into the latest trends and what they mean for you.

Home Prices: Slow but Steady Growth

National home prices have seen steady appreciation, with an annual growth rate of 3.4% at the end of 2024. CoreLogic predicts a modest dip of 0.2% from December 2024 to January 2025, followed by a 4.1% increase by the end of this year. This suggests a market that’s stabilizing rather than experiencing extreme highs or lows.

For buyers, this means home values aren’t skyrocketing like they did during the pandemic, but affordability remains an issue. Sellers, on the other hand, can still expect their property values to hold firm, though pricing competitively will be key.

Mortgage Rates and Affordability

The average 30-year fixed mortgage rate is still hovering above 6%, making homeownership more expensive compared to the historically low rates seen in previous years. However, experts anticipate a gradual decline in rates throughout 2025, which could provide some relief to buyers on the fence.

Higher borrowing costs mean first-time buyers need to budget carefully, considering not just the mortgage payment but also rising insurance and property tax costs. Those looking to refinance may find better opportunities later in the year if rates trend downward as predicted.

Housing Inventory and Market Activity

One significant shift in 2025 is the increase in available homes. Inventory levels are projected to rise by 11.7% compared to last year, offering buyers more choices. However, demand has softened in some regions. In the Tri-Cities area, for example, home sales were down 25% in January compared to the previous month.

More inventory is generally good news for buyers, as it can reduce bidding wars and stabilize home prices. Sellers should be aware that with more competition, pricing their homes appropriately and ensuring they’re in top condition will be crucial for attracting offers.

Regional Spotlight: California and the Bay Area

The California housing market remains a mixed bag. While some counties are seeing price gains, others are stabilizing or experiencing slight declines. The Bay Area, in particular, continues to be a high-cost market, but with mortgage rates still high, some areas are seeing longer days on market and more price adjustments.

For potential buyers in California, this could be a window of opportunity to negotiate better deals. Sellers, meanwhile, need to be strategic with pricing and marketing to stand out in a more competitive environment.

Policy Changes Affecting Real Estate

Federal and local policies are playing an increasingly important role in shaping the housing market. The Federal Reserve recently introduced stress test scenarios for major banks, assessing their ability to withstand downturns in both residential and commercial real estate. While this doesn’t directly impact homebuyers, it signals the government’s concern about economic stability and housing affordability.

On a local level, zoning reforms are gaining traction. Cambridge, Massachusetts, recently ended single-family-only zoning, allowing for higher-density housing developments. Similar initiatives in other cities could increase housing supply and improve affordability over time.

Looking Ahead: What to Expect in 2025

• Gradual mortgage rate declines – This could make homeownership slightly more affordable later in the year.
• More inventory on the market – Giving buyers more choices and potentially moderating price growth.
• Policy changes impacting housing development – Which could affect affordability and market accessibility.
• Regional variability – Some markets will remain competitive, while others may see cooling trends.

Final Thoughts

The residential real estate market in February 2025 presents both challenges and opportunities. Buyers should keep an eye on interest rates and explore markets with increasing inventory. Sellers need to be strategic with pricing and marketing as competition rises.

Whether you’re buying, selling, or investing, staying informed on market trends is crucial. As always, working with a knowledgeable real estate professional can help you navigate the shifting landscape and make the best decisions for your situation.

Despite a Cooling Real Estate Market, Billionaire Grant Cardone Predicts Investors Will Come to the Rescue

Billionaire Grant Cardone Predicts Investors Will Come to the Rescue

The real estate market is a key indicator of the health of the economy, and when it's in a slump, it can have a domino effect on other industries. The current market conditions have left many homeowners, buyers, and investors feeling uncertain and hesitant.

Buyers are looking for deals, not wanting to pay full price, and sellers have been, thus far, reluctant in taking less for their home than what they "feel" it's worth - especially after the big runup most local US housing markets saw during the pandemic.

Housing prices sticky on the way down

There's always an emotional component to buying or selling one's home, so prices are usually "sticky" on the way down.  It's a hard pill for most to swallow that you're going to get less for your home today than yesterday, so the natural tendency is to wait "in hopes" that the "perfect" offer comes in.

In an appreciating market, procrastination can be your friend.  In a depreciating housing market, price reductions may not even keep up with or get you out in front of falling prices.  There's always a lag between what's happening on the ground today and when the data is released, so we must use data, not our emotions, to project out future possibilities and probabilities to better guide our decisions.

Housing inventory supply and demand stalemate 

The emotional dynamic is even more in play today because housing inventory levels remain historically low which is strongly overshadowing the increasing headwinds in the residential housing market.  In particular, affordability continues to erode as the Fed remains steadfast in raising interest rates to fulfil their promise to do whatever it takes to curb inflation.

Watch what they do as it will clue us in and significantly impact the direction of the market.  As long as they remain restrictive in their policies, that will force a continued cooling of the housing market (again, with a lag effect when it comes to their policies actually impacting home prices).

Until then, there's a stalemate unique to this housing market that we didn't see back in 2008.  Since many potential sellers locked in 2-4% mortgage interest rates over the past few years and their home is worth substantially more today, they don't have to sell.  And, in most cases, they're not as they'd have to buy less of a home (due to the price appreciation over the last few years) and do so with mortgage interest rates now over 6% (resulting in a significantly higher monthly payment).

Ultimately, the erosion in price will come when this stalemate breaks.  For now, the bulk of the housing market is made up from "transactions of necessity" (people having to relocate for work, family circumstances, etc.), so most local housing markets are seeing falling prices, but they aren't dropping as quickly or as much as some expected.

What will the spring housing market bring us?

In fact, in many local housing markets, there's been an uptick in demand this early spring, but there hasn't been a flood of homes hitting the market.  With spring approaching, how this plays out will also give us a better feel for what's to come.

Will we see the typical seasonal trend of an increasing number of homes hitting the market this spring?  And, what will happen with buyer demand if interest rates keep rising?  Even though buyer demand has dried up considerably, the right home, in the right market, is still selling with multiple offers - the Sacramento real estate market is one such example highlighted by Ryan Lundquist a Sacramento appraiser and a great follow on Twitter - @SacAppraiser).

Inventory levels are key to 2023 home prices

Again, the key to 2023 home prices is seeing what unfolds with inventory levels and buyer demand.  As it sits today, these historically low inventory levels are keeping the housing market propped up to a large extent, so it will take time, but billionaire investor and entrepreneur Grant Cardone believes that investors will play a vital role in reviving this slowing real estate market when that time comes.

Economists have been calling for a housing crash for several months. Some even predicted that home prices would fall by as much as 30% in 2023. While these claims are understandable considering that rising mortgage rates have priced many would-be buyers out of the market, it appears that a different scenario is beginning to play out.

Best-selling author and real estate fund manager Grant Cardone agrees that the housing market is in trouble, but points out that investors will create enough demand to keep the market from crashing.

“Banks don’t trust borrowers, and those they do trust will have to pay. This will move homeowners to the sidelines and slowly reduce home prices,” Cardone said. “Investors will step in to pick up single-family homes at lower prices with less competition. That being said, there will be no housing crash! Investors, like myself, will save the day and step in to buy the homes, put renters in place and enjoy them for the cash flow, not the kitchens and cabinets.” - Yahoo! Finance

The Interplay of Supply and Demand: Understanding San Francisco's High Housing Prices

San Francisco Bay Area Sky High Real Estate Prices

San Francisco has long been known for its high cost of living, especially when it comes to housing. In recent years, the city's housing market has become even more expensive, with prices continuing to rise. This can largely be attributed to the interplay of supply and demand in the city's housing market.

Supply and demand are two key factors that impact the price of housing in San Francisco. When demand for housing in the city is high and supply is low, prices tend to go up. Conversely, when demand is low and supply is high, prices tend to go down. This is the basic economics of the housing market.

There are a few reasons why the supply of housing in San Francisco has not kept up with demand. One major factor is the city's restrictive zoning laws and regulations, which make it difficult to build new housing. In addition, the cost of construction in San Francisco is notoriously high, which further limits the amount of new housing that is built.

Another factor contributing to the high cost of housing in San Francisco is the city's strong job market. Many tech companies are based in the Bay Area, which has led to an influx of highly paid workers who are willing to pay top dollar for housing. This increased demand for housing has put further pressure on prices.

Additionally, San Francisco has limited geographic space, which means that the supply of available land for new housing is limited. This has led to increased competition for existing housing units, which further drives up prices.

Overall, the high cost of housing in San Francisco is largely driven by the interplay of supply and demand in the city's housing market. While there are a variety of factors that impact the supply of housing in the city, the limited supply of land, restrictive zoning laws, and high construction costs are major contributors. Meanwhile, the city's strong job market and high demand for housing among highly paid workers also drive up prices. As a result, housing in San Francisco remains one of the most expensive in the country.

Even with people leaving the San Francisco Bay area, prices remain elevated because of the huge supply and demand imbalance:

"More than 90,000 people left Silicon Valley during the first two years of the COVID-19 pandemic, according to an annual report that found a slowing “exodus” has reverted the tech center’s population to 2013 levels.

A net total of 43,800 residents moved out of the region from July 2021 through June 2022, the fourth consecutive year that the region’s overall population has shrunk and the second year that net domestic migration topped 40,000, according to the Silicon Valley Index. The annual look at the health of the region found housing prices and job numbers continuing to rise well into last year, even as the number of people in the region returned to levels not seen since Google Glass still had a chance to be the next big thing." - MarketWatch

To expand on these dynamics even further, @Mikesimonsen, Co-founder CEO Altos Research, has a great Twitter thread on how home prices can "... still be so unaffordable when the population is declining?"

In short, easy as Mike notes, "The median home can (forever?) remain unaffordable to the median income in the Bay Area because only the richest 2000 can buy."

Again, there are countless variables at play in any local housing market, but at the end of the day supply and demand rules the roost and strongly overshadows many extenuating circumstances.

When you have so many people chasing such a limited supply, there's always a group doing well (good economy or bad) to create a market that wouldn't otherwise exist if there wasn't such a large housing supply / demand imbalance.

Don't lose sight of this otherwise your perspective will be skewed towards what makes sense comparatively even though the same dynamics don't exist across all housing markets!

Unlocking the Secrets of Success in Real Estate Investing: Insights from Brandon Turner

Real estate investing is a popular choice for many people looking to build wealth and secure their financial future. However, despite its potential rewards, the majority of people who venture into this field fail to achieve their goals. Why is this the case? What are the keys to success in real estate investing? In this blog post, we delve into these questions and more as we explore the video "Why Most Won’t Succeed in Real Estate Investing with Brandon Turner."

Who is Brandon Turner?

Brandon Turner is a well-known real estate investor, author, and educator. He is a co-host of the BiggerPockets podcast, a popular resource for real estate investors, and has written several books on real estate investing. In the video, Brandon provides valuable insights and advice on why most people fail in real estate investing and how to increase the chances of success in this field.

Real Estate Education and Preparation

One of the key takeaways from the video is the importance of education and preparation. According to Brandon, many people jump into real estate investing without fully understanding the risks and rewards involved. To succeed in this field, it is essential to educate yourself on the various investment strategies, as well as the legal and financial aspects of real estate investing. It is also important to have a clear understanding of your goals and what you hope to achieve through your investments.

Discipline and Perseverance to Become a Real Estate Pro

Another important factor that Brandon highlights in the video is the need for discipline and perseverance. Real estate investing is not a get-rich-quick scheme, and success in this field often requires hard work, patience, and persistence. It is important to have a long-term outlook and to be willing to weather the ups and downs of the market.  

The Magic Happens When You Put in the Hard Work

This is key.  It requires work.  Deals don't fall on your lap while you're sitting on the couch hoping for something to role your way.  Most people are drawn in because of the potential "rags to riches", but don't realize real estate doesn't turn into a "money tree" without tilling the ground, planting the seeds, and nurturing the seeds until your trees mature enough to bare fruit.  Again, this doesn't happen overnight.  Once most realize this, they move on and lose any shot at living up to their potential. 

Networking and Building Relationships to Build Your Real Estate Business

In addition to education and perseverance, Brandon also stresses the importance of networking and building relationships in the real estate industry. Having a solid network of professionals, such as real estate agents, mortgage brokers, and contractors, can help you make informed decisions and find the best investment opportunities.

Take Action

Finally, Brandon emphasizes the importance of taking action. No amount of knowledge or preparation will lead to success if you don’t take the necessary steps to put your plans into action. Whether it's finding your first investment property or expanding your portfolio, it is essential to take calculated risks and be willing to put in the effort required to succeed.

This BiggerPockets video, "Why Most Won’t Succeed in Real Estate Investing with Brandon Turner" provides valuable insights into the keys to success in real estate investing. From education and preparation to discipline and perseverance, to networking and taking action, Brandon provides a comprehensive overview of what it takes to succeed in this challenging but rewarding field.

Remember, none of this becomes a reality without taking what you've learned and putting it to use.  Again, the magic happens in the work.  Doing the small things and building the good habits.  Doing this consistently is no secret.  The secret is most won't play the long game to achieve their goals, but I trust that won't be you!

S&P Case-Shiller Housing Price Index - October 26, 2010 Release

S&P/Case-Shiller Home Price Indices - Prices stable today and headed lower tomorrow was the story of the last housing report.  Today, as expected by most analysts, the report points to housing prices heading lower again.

"A disappointing report. Home prices broadly declined in August. Seventeen of the 20 cities and both Composites saw a weakening in year-over-year figures, as compared to July, indicating that the housing market continues to bounce along the recent lows," says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. Over the last four months both the 10- and 20-City Composites show slowing growth, after sustaining consistent gains since their April 2009 troughs.

"The month-over-month growth rates tell the same story. Fifteen of the 20 MSAs and the two Composites saw a decline in the month of August as compared to July levels. The 10- and 20-City Composites fell 0.1% and 0.2%, respectively. Indeed, the housing market appears to have stabilized at new lows. At this time, it does not seem that any of the markets are hanging on to the temporary momentum caused by the homebuyers' tax credits."

(S&P/Case-Shiller Home Price Indices - 

Click on chart for larger image in same window)

In consideration of current economic conditions and recent housing data that continues to point towards increasing inventory levels in many locales, the downward pricing trend highlighted in this report should continue to be reflected in the next S&P / Case-Shiller release.

Actual S&P/Case-Shiller Housing Price Index PDF report: "Home Prices Increases Slow Down in August According to the S&P/Case-Shiller Home Price Indices".

More to come ...