The decline in U.S. home values continues. Home prices in 20 top U.S. cities declined at the fastest pace ever, on a year-over-year basis, as foreclosures increased and banks sought to unload homes by selling at cut-rate prices. Home prices in a 20-city sample plunged 16.6% in August, on a year-over-year basis in, according to the S&P / Case-Shiller U.S. National Home Price survey (pdf). The index has fallen every month since January 2007. Further, prices in a 10-city survey plummeted a record 17.7% in August on a year-over-year basis.
Economists surveyed by Bloomberg News had expected home prices in the 20-city Case-Shiller index to decline 15.9-17.1% in August on a year-over-year basis.
Large price declines in western U.S.
The areas with the largest annual percentage declines were: Phoenix, -30-7%, Las Vegas, -30.6%, Miami, 28.1%, San Francisco, -27.3%, Los Angeles, -26.7%, San Diego, -25.8%.
Not one Top 20 metro area experienced a year-over-year increase in home values as of August and only two cities saw an increase in home prices in the month of August: Cleveland, 1.1% and Boston, 0.2%. Prices in Denver were flat in August.
Economist Peter Dawson tried to be as diplomatic as possible about year-over-year price data.
"We may not have bottomed regarding U.S. home prices, but we may be approaching a bottom," Dawson said. "We're still looking at a minimum of two more quarters of year-over-year price declines, but with some engine of economic growth in 2009 and FHA and U.S. Treasury refinance programs in place to reduce foreclosures, we may see a bottom in prices in 2009. Right now, there's about a 20-30% chance of that."
Year-over-year percentage price changes in other major U.S. cities were as follows: New York, -6.9%, Chicago, -9.8%, Boston, -4.7%, Washington, D.C., -15.4%, Denver, -5.1%, and Seattle, -8.8%.
Economic Analysis: Another horrible U.S. housing sector statistic, and the sector remains in deep recession. Economists almost universally agree that the U.S. housing sector is far from bottoming; some see a housing recovery starting in Q1/Q2 2009, while others say it won't start until late-2009, at the earliest.
Further, given that foreclosures add to home inventories and depress prices, keeping more people in their homes with public-sponsored refinancing programs must remain a priority for the U.S. Treasury. The sooner it approves the FDIC's model refinance program, the better: it's a key factor in not only shutting-off the toxic asset pipeline, but also ending home price declines.
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Reader Comments (Page 1 of 1)
10-28-2008 @ 2:02PM
Iridium said...
The bottom is where the average price of a home was before the bubble started. In some places that is $300k or more from the current price.
The actual City of Cleveland proper has over 5000 homes for sales under $2000. If you look at the weekly sales reports there are hundreds of homes each week sold to banks for $250-500 each.
It is possible to actually buy a whole city block for less than $20,000. How is that for a property value. The land would actually have more value as a dump.
1-09-2009 @ 2:51PM
Kate said...
Homes were overvalued with the housing bubble. I'm glad pricing on homes are falling and that the market is readjusting. Home prices were so unrealistic high, the average person could buy a house. The unfortunate part is everyone who did not participate in the faulty real estate bubble suffers through the economic turn down. That would be me and it makes me mad.