Wikinvest Wire

Housing prices register more record declines

Tuesday, February 24, 2009

The December report(.pdf) for the S&P Case-Shiller Home Price Indices shows both the 10-city and 20-city index making new record annual declines of 19.2 percent and 18.5 percent, respectively. Price indices for all 20 cities are shown below.
The top to bottom position on the right (corresponding to the order of the legend in the upper left to aid in viewing the data) has been remarkably consistent over about the last six months. Just one slight change was required for the December data as Atlanta sunk below Dallas, these two areas managing to hang on to gains of just 14 percent and 16 percent, respectively, so far in the decade.

Ironically, New York and Washington, the two areas that many would consider to be the source of the lion's share of today's housing problems, have fared the best.

As shown below, Phoenix maintained its lead over both Las Vegas and San Francisco for the most extreme annual price plunge, all three areas continuing to sport declines of more than 30 percent as indicated in red.

It's not clear whether any more areas will join that group - Miami and Los Angeles are closest and Miami appears to be gaining momentum with a 2.7 percent drop in prices last month.
IMAGE Those five percent monthly declines in Las Vegas and Phoenix are quite remarkable - you only need a house price of $200,000 to turn that into a $10,000 a month hit to home values. I remember in California a few years back when homeowners used to boast that their home's value rose another $10,000 over the last month.

Home values are now falling as fast as they rose, areas like Los Angeles and Miami almost perfectly symmetrical in their rise and fall as shown in the first chart above.

David M. Blitzer, Chairman of the Index Committee at Standard & Poor's, noted:

The broad downturn in the residential real estate market continues. There are very few, if any, pockets of turnaround that one can see in the data. Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines, and eight of those MSA’s now with negative rates exceeding 20%.

If one looks in detail at the annual return data, it can be seen that 13 of the 20 MSA’s and the two composites have been reporting consecutive record declines since December 2007. The monthly data follows a similar trend, with all of the metro areas reporting at least four consecutive months of negative returns.
With last month's further declines, both the 10-city and 20-city home price indices are now back to levels last seen in late-2003.



WatchingMarcitz said...

And yet Obama wants to try and put a floor under this. What material would it be made out of to withstand such downward force?

The material would be renters. These are the invisible victims of the Obama housing rescue efforts. Did you know that 100 MILLION people rent and are enjoying falling rental rate and the chance of possibly buying a house (and saving everyone else by entering teh market? Yet for some reason the President doesn't want or care about them. See more data on this here:

Anonymous said...

So whats the deal with the reported 70% of all foreclosed homes that are sitting on the banks books at a much higher value than they could get if they actually tried to sell them????????

Tim said...

Yes, Rick Sharga of RealtyTrac said recently that 70 percent of foreclosed homes are not yet listed for sale. It's not clear whether banks are holding them off because of pricing or whether they are inundated with processing them all.

Martin said...

I'm no expert, but I wouldn't be surprised to learn that banks are now keeping those REO homes somewhere on their books, at crazy valuations, and are trying to put off marking them down to their real values as long as possible. And somewhere, on page 468 or so, there will be a footnote saying that this figure is the result of a provisional valuation. Or something like that.

Martin said...

Just stumbled on . It appears that rather a lot of houses that have been bought by banks at auction -and, I would think, should now be kept on their books at the price they would probably fetch at a regular sale, whatever that is in the present circumstances- are still carried on their books at the value of the mortgage. "So the bank is taking it back at the mortgage value and not writing it down."

Now that's a piece of creative accounting!

Anonymous said...

Greenspan made it possible, idiots made it happen. He did not have anyone by his or her throat to purchase anything or take out second mortgages (which is a solid disgrace in the first place.) Only an idiot took out second mortgages or worse bought shacks for ten times their real value. Now they have to be men and stand up for their actions, or I should say losses. Do I feel for any of them? NO. I did not get involved in this mess, do not look to me to pay for it. May the banks who loaned on property they knew damn well had nothing near such underlying value to back the loans they made - let THEM eat it with their clients, and have their idiotic management pay for their incompetence and stupidity.

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