Index shows further decline in home prices

Tuesday, Jan. 27, 2009 | 9:06 a.m.

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Real Estate in Crisis

More news on the troubled Las Vegas housing market is out today and it confirms what industry observers are saying: Prices here tumbled in the final months of 2008 at a rate greater than in most other cities.

Data through November from financial analysis company Standard & Poor's for its S&P/Case-Shiller Home Price Indices shows continued broad-based declines in the prices of existing single-family homes across the United States, with 11 of 20 metro areas analyzed showing record rates of annual decline, and 14 reporting declines in excess of 10 percent from November 2007.

"The freefall in residential real estate continued through November 2008," said David Blitzer, chairman of the Index Committee at Standard & Poor's. "Since August 2006, the 10-City and 20-City Composites have declined every month -- a total of 28 consecutive months. Every region was down in excess of 1 percent for the November/October period, with eight of the regions recording record monthly declines.

"Phoenix and Las Vegas were the worst performers for the month at -3.4 percent and -3.3 percent, respectively."

In addition, eight of the metro areas analyzed posted their largest monthly decline on record -- Atlanta, Boston, Charlotte, Chicago, Dallas, New York, Portland and Seattle.

"It is clear .. that the decline in home prices is affecting all regions regardless of geography or employment opportunities," S&P said.

Last week, the Greater Las Vegas Association of Realtors reported that the median price of all houses, condos and townhouses being sold in Southern Nevada continued to decline in December to 2003 levels.

The median price of a single-family home decreased 5.9 percent during the month, from $186,000 in November to $175,000. That's nearly 33 percent less than December 2007.

However, buyers reacted to the lower prices as sales were up 184.2 percent for homes and 172.5 percent for condominiums and townhouses, compared to December 2007.

Steve Green can be reached at 990-7714 or steve.green@hbcpub.com.

Discussion: 3 comments so far…

By KDR81

1/27/09 at 9:41 a.m.

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And its going to keep falling it look like. Predictions made back in 2006-2007 suggested that home prices were overvalued by as much as 46 percent.

And given the fact that homes built between 2004-2007 were smaller with smaller lots than those prior I would expect home prices to dip below the 2003 median home price level.

THe fall will be slower from now on, but median home prices will probably reach between $130k-$150k before we actually hit the bottom.
By Future2012

1/27/09 at 11:18 a.m.

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All the stimulus package talk is not yet addressing the source of the recession which is the housing origination, insurance, and securitization "process".

Without change the prices will be tanking to 1999-2000 level bring more people into the morass.

With lack of transparent processes in place, the economy tipped when extra money was taken out of the economy due to the summer import oil price rise and foreign lenders, and subsequently the hedge funds shorted the exposed banks in September 2008. By mid-September Hank Paulson was calling for a bailout and job losses accelerated in October.

Until the process (including process assurance and oversight) for home loan origination, loan insurance, and loan securitization is fixed the monetary and spending stimulus (while it may boost the economy short term) it will long term do nothing to tip the jobs and economy trajectory positive (and may be made worse with the additional debt burden).

Simply once into the tipping point activities the process failure lead to the liquidity failure, which leads to the jobs failure.

The TARP has provided monetary liquidity to only "temporarily save" the financial system. Without the housing process change we cannot move in a positive trajectory.

The tipping point in the jobs was due to the housing construction and home furnishing down turn. Temporary infrastructure jobs not in housing, will not provide a tipping of the jobs hiring trajectory.

You must fix the process (including process assurance and oversight) first or you are just pouring money into a broken system. Process change would include mark-to-market valuation, rebuilt credit rating agencies, reined in hedge fund arbitrage exchanges, and eliminate the system is set up so that fee-collecting middlemen churn re-structured financial instruments by reselling them. Brokers make money on every transaction.

Eliminate dark pools of liquidity (or virtual trading arenas) which have created a two-tiered system where big speculators can move stocks and securities without the retail investors market knowing they were traded. Retail investors are left in the dark.

Confidence by the public requires they see real changes, and believe that the housing process has been fixed.
By rachelmac

1/28/09 at 1:40 a.m.

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To stop the decline, people really need to take advantage of the aid out there, from Citigroup and others. In addition to Citi, Fannie Mae, The federal gov't FHA, many states, JPMorgan Chase, Wachovia, and Bank of America/Countrywide have committed to helping over 2 million homeowners between them keep their homes. I found more info on the programs here.
www.needhelppayingbills.com/html/help_wi...