Home Prices Post Record Decline

S&P: U.S. Home Prices Fall By Record In October For 23rd Straight Month Of Deceleration

(AP)  U.S. home prices fell in October for the 10th consecutive month, posting their largest drop since early 1991, according to a key index released Wednesday.

The record 6.7 percent slide in the Standard & Poor's/Case-Shiller home price index also marked the 23rd consecutive month that prices either fell or grew more slowly than the month prior.

"No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim," said Robert Shiller, who helped create the index, in a statement.

The previous record decline was 6.3 percent, recorded in April 1991. The index tracks prices of existing single-family homes in 10 metropolitan areas.

It is considered a strong measure of home prices because it examines price changes of the same property over time, instead of calculating a median price of homes sold during the month.

Home prices could fall another 10 percent over the next 12 to 18 months before bottoming out, said Patrick Newport, an economist with financial consultancy Global Insight, in an interview.

Newport said four of the largest groups currently trying to sell homes - banks holding foreclosed properties, homebuilders, speculators and unemployed consumers - are typically flexible about lowering house prices because they need to get rid of the property.

Sales of homes will likely start to rebound late in 2008, with price appreciation to follow, Newport said.

A second, broader Case-Shiller index, which measures 20 metropolitan areas, fell 6.1 percent in October. Among the 20 areas used in the broader index, 11 posted record year-over-year declines and all 20 declined in October compared to September.

Leading the index lower was Miami, where prices fell 12.4 percent in October compared to the same month last year. That led it to surpass Tampa, Fla. as the worst-performing city. Tampa posted a year-over-year loss of 11.8 percent.

Besides those two cities, Detroit, Las Vegas, Phoenix and San Diego also posted double-digit year-over-year declines.

Atlanta and Dallas, which had previously posted price appreciation, fell in October. Prices fell 0.7 percent in Atlanta and 0.1 percent in Dallas compared to a year earlier.

Only three areas - Charlotte, N.C., Portland, Ore. and Seattle - posted year-over-year home price appreciation in October. Charlotte posted the largest gains at 4.3 percent.

Among the three, only Charlotte is likely to be saved from declining house prices within the coming few months, Newport said, because the area has not seen periods of rapid appreciation like the other markets.

Kevin Johnson, co-founder of Homes of the South Inc. in Charlotte, agreed.

"We never jumped very high like other areas," Johnson said. "We don't have a hard fall as other places."

Bob Morgan, president of the Charlotte Chamber of Commerce, said the area's strong economy is also playing a role in supporting price appreciation. While the numbers are preliminary, more than 14,000 jobs were created in the Charlotte area in 2007, he said, compared with more than 12,000 jobs in 2006.

The job growth is coming from a "pretty healthy" variety of sectors, including the financial industry, Morgan said. Charlotte is home to two of the nation's four largest banks, Bank of America Corp. and Wachovia Corp.

Carole Brake, the sales manager at Bissell Hayes Realtors SouthPark Office in Charlotte, said prices are still up despite an increase in inventory.

"Sellers are not in a mode to reduce their prices. They want a fair market price for their home," Brake said.

[standlee5]

This entire housing debacle should make it abundantly clear that deregulating the banking industry was a very bad idea. Congress is responsible for dropping the ball and letting this happen. Credit standards were set for a reason and they were set by market forces. We need to stop bailing out businesses and start demanding accountabiity. We all pay the price while those responsible make billions.

[inventagod]

With every Tom, *** and Harry in the real estate biz trying to make a million, this was bound to happen. What you see is a truly inflated market, just itching to drop like a stone. Of course, this is normal in the world of home sales...

[ov442]

"Sellers are not in a mode to reduce their prices. They want a fair market price for their home," Brake said.
hahaha, whats ''fair market price''? whatever someone told them they should sell for? what a fraudulent appraisel service says its worth? depending upon how much profit someone decides they want?
whatever!
last i heard, ''fair market price'' for anything was whatever someone would pay for it on the market without any extra influences interfering in the bidding or sale of the item.
If you have to drop your appraised $400,000 house to $330,000 to sell it, then $330,000 was the "FAIR" market price.
If you can just sit on your house for sale for as long as it takes, more power to you. Otherwise, get your head out of your rear.

[Razzl]

A lot of ordinary people keep asking when the bottom will be so they can buy, but there''s a much simpler way of looking at it that''s self-adjusting to your income: when the price of the home you''re looking at is between 2.5 times (safest ratio) and 5 times (riskiest ratio) your gross income before taxes, (including all other things like closing costs and down payments), you can buy the home. It won''t matter where we are in the downturn because if the home is in the range of affordability for your income (and is sound and properly appointed for its size/location) then it''s no longer a bubble property and isn''t likely to lose much more value in the correction.

[beehive21-2009]

Great time to buy

[drivelphobe]

This is once again great news. There is nothing grim about this correction in home prices. We need it.

People who bought homes to live in are fine. The others, the flippers and investors, are the reason the housing market went wild and they should all go belly-up, along with lenders, driven by avarice, who chased their greed and made thousands of bad loans to cheats and liars. To hell with them all.

"Sellers are not in a mode to reduce their prices. They want a fair market value for their home." Well isn''t that tough! After *** everyone in the housing food chain, how arrogant they are when the fair market value is what ever they can get. I hope their losses are huge and that they lose more every minute they aren''t in a mode to sell for what the market says it''s worth. Idiots and cheats.

[missingamerica]

Let me see...the Republicans set up the banks to feel invincible with their bankruptcy law changes and then proceeded to run the nation on credit to prove Bush''s "trickle down" tax cut theories.

But now it is all falling apart because energy prices and lousy pay and jobs have smacked America right in the teeth.

Now, as to the Republican response...given all they typically and traditionally say about "personal responsibility" (which, amusingly enough, doesn''t apply to rich people, banks, Wall Street, or Business in general), I''m betting on:

"This nation needs to return to the use of debtor prisons and stem this tide of hooliganism!"

[usayesterday]

Seeing as for the past thirty years, the cost of living increased, while the purchasing power of the average American declined, we have another 70% drop in prices before we get back to the affordability levels of the 70s.

Posted by brianbwb at 01:19 AM : Dec 27, 2007
.................

That''s true brian. The housing correction will take a huge double digit decline in order to come close to the median income levels of the various regions of the country.

I bought my first home last year, on good credit and at a fixed rate. Granted, I have easily lost about 20% of the value of when I bought it, but the most important thing is that I enjoy it and plan to live in it for quite some time. I will get my investment back eventually, and then some.

As for the house flippers/investors... well, I really never had much sympathy for those types anyway. Their greed is one of the major reasons for the current housing/mortgage crisis we are facing.

[brianbwb-2009]

Seeing as for the past thirty years, the cost of living increased, while the purchasing power of the average American declined, we have another 70% drop in prices before we get back to the affordability levels of the 70s.

Keep up the pressure Americans, try as best you can to refrain from buying another house, until the elitist idiots get the message. Same for expensive designer T-shirts and sport shoes, credit cards and banks, insurance, the stock market, and American cars.

If they go out of business, that''s just too bad, if they provide little or no benefit to Americans by their existence, we are better off without them. They collude against us to manipulate supply, and therefore cost, and so we, out of self preservation, must respond in kind.

[hypnotoad72]

Splendid! Now they might almost be affordable again. Homes should never have been treated in the usual "supply and demand" routine as of course sellers want a fair value.

I also want $2000 for my old IBM brand PC made in 1981 with 64Kb of RAM and 4.77MHz processor because it was overpriced when it came on the market too ($2880). Wish me luck too.