Home Prices Take Record Tumble

18.2 Percent Annual Rate Drop From November 2007 The Sharpest On Record

(AP)  Home prices tumbled by the sharpest annual rate on record in November as the deepening housing slump and national recession spared no region, according to a closely watched index released Tuesday.

But the silver lining might be that more families can finally buy a home for the first time in years. Falling home prices coupled with lower interest rates have shaved hundreds of dollars off monthly mortgage payments, and that is luring buyers back into the market, new data this week showed.

The Standard & Poor's/Case-Shiller 20-city housing index tumbled by a record 18.2 percent from November 2007, the largest decline since its inception in 2000. The 10-city index dropped 19.1 percent, tied with October for the biggest drop in its 21-year history.

Both indices have recorded year-over-year declines for 23 straight months. Prices are at levels not seen since February 2004.

But the numbers may not be as ugly at second glance, according to Patrick Newport, an economist with IHS Global Insight.

"If you adjust for inflation, they're not record declines," Newport said. "Home prices are still dropping at about a 20-percent clip, but it's not as bad as it's been in last six months."

But the recession and sweeping job losses don't bode well for a near-term turnaround in housing prices. Newport estimates prices will drop another 10 percent to 15 percent this year.

In fact, Americans' mood about the economy darkened further in January, sending a widely watched barometer of consumer sentiment to a new low, the Conference Board said Tuesday.

When it comes to real estate prices, the cities suffering the most are the ones that had the biggest housing bubbles. Phoenix, Las Vegas and San Francisco all clocked in annual price declines of more than 30 percent in November, according to Case-Shiller.

And December figures probably won't look much better.

The National Association of Realtors said Monday the median home price fell a record 15 percent last month to $175,400, down from $207,000 a year ago. That led to a surprising jump in sales from November's level.

With current interest rates and a 10 percent down payment, anyone who buys a median-priced home now would save $254 a month compared with the median price and interest rate of a year ago.

The Realtors' home affordability index in November showed its best reading since 1993.

"I bet when they incorporate December's numbers," Newport said, "it will show housing is as affordable as it was in 1973."

[joule18]

A friend of mine told me this week-end that she knows of two families that bought 2nd homes that were severely discounted due to the housing collapse. Their credit was good. However, they then walked out on the first house because the value didn''t equal what they had paid for it. Shameless.

They are replacing unpaid borrowed money with more borrowed money thereby just delaying the full effect of out economic condition and thereby transferring the risk against our Currency. Other countries, mostly China, are purchasing US treasuries by the Trillions and it has to be paid back. If we cannot pay this money back or there is an appearance of us not being able to pay them back were screwed worse than now. China Now has more control over our economic future than we do. They have the ability to crash the Dollar by selling their treasures bills all at once. The treasury would have to raise interest rates substantially to get more people to purchase treasury bills to essentially refinance the debt at higher interest rates thus causing price inflation, and if there is not enough purchasers, THE DOLLOR BECOMES WORTHLESS. Hold on to your seat.

%u201CThe indebted is a slave to the lender%u201D. mrthinker1 Jan 2009

We are now likely more than ever to see the Federal Government default on its debt obligation just like the regular folks are now. When this happens the value of the Dollar will probably decline just like houses are now. This will cause massive inflation like never before. The guys in the treasury, Paulsen and Bernanke, are telling our Government, Bush and Obama, to borrow more money to support our over leveraged economy because they don%u2019t know what else to do to stave off deflation and possible depression.

This is all result of too much debt both private and public. George Bush just added to the 2.2 trillion that was already there. Now its 7.7 trillion. Under Obama its estimated to become between 10.5 and 12 trillion. Don%u2019t let anyone tell you different. This is a crushing debt load.

After all the ARM and interest only loans get repossessed the people that are upside down will be getting repossessed for several years. Prices will continue to decline back to what is affordable. It''s about time. This whole asset bubble was so stupid. People just follow like sheep. I bucked the trend by selling my condo in 2005, made $78,000 profit, paid off my cars and $5,000 in credit card debt, had $53,000 left over and started renting ever since.

I am still out of debt and may purchase if the price is right, 25% of my income is the rule.

Nobody could afford the houses they were buying since 2002 and I could hardly convince anyone that the whole thing was going to crash. This is a real reality check for many over leveraged Americans.

Just a thought.

[win4usa]

We haven''t seen anything yet. We''re going to see at least two more rounds of foreclosures: 1. The banks that were holding off on foreclosusres until March and 2. the new foreclosures for people that are getting laid off in 2009. That doesn''t take into account the commercial loan defaults or the credit card bubble that''s going to burst next.

[whatithink10]

I may be the only one, but I want home prices to drop further. We are not nearly off the peak yet. And, since I don''t want a huge mortgage, I''m not so concerned about the interest rates.

IT''S THE PRINCIPAL, STUPID!