AP – In this May 23, 2011 photo, a home is shown for sale in Chagrin Falls, Ohio. Home prices have reached …
WASHINGTON – An index of home prices in big metro areas has reached its lowest level since 2002, driven down by foreclosures, a glut of unsold homes and the reluctance or inability of many to buy.
Prices fell from February to March in 18 of the metro areas tracked by the Standard & Poor's/Case-Shiller 20-city index. And prices in a dozen markets have reached their lowest points since the housing bubble burst in late 2006.
The nationwide index fell for the eighth straight month. Prices have now fallen further since the bubble burst than they did during the Great Depression. It took 19 years for the housing market to regain its losses after the Depression ended.
Prices rose last summer, fueled by a temporary federal home-buying tax credit. But they've plunged since then. This month's report marked a "double dip in home prices across much of the nation," said David Blitzer, chairman of the Index Committee at Standard & Poor's.
After adjusting for inflation, the home-price index has sunk to a level not seen since 1999.
Many economists think prices nationally will drop at least 5 percent more by year's end. They aren't likely to stop falling until the glut of foreclosures for sale is reduced, employers start hiring in greater force, banks ease lending rules and would-be buyers regain confidence that a home purchase is a wise investment.
"Folks are having so much difficulty in getting financing for a home," said Mark Vitner, senior economist at Wells Fargo. "It may be early next year before prices hit bottom."
Another obstacle to a rebound in prices: A delay in processing foreclosures. Homes in foreclosure sell for, on average, 20 percent discounts. When they do, they pull prices down further. But many foreclosure sales have been delayed while federal regulators, state attorneys general and banks review how those foreclosures were carried out over the past two years.
Once those homes are eventually foreclosed upon, they will trigger a further price drop in many markets. Those declines are "etched in stone," said Patrick Newport, U.S. economist at IHS Global Insight.
The 12 cities now at their lowest levels in nearly four years are: Atlanta, Charlotte, Chicago, Cleveland, Detroit, Las Vegas, Miami, Minneapolis, New York, Phoenix, Portland, Ore., and Tampa.
Minneapolis fared the worst in March; prices there fell 3.7 percent. They dropped 2.4 percent in Charlotte and Chicago and 2 percent in Detroit. But prices rose 0.1 percent in Seattle and 1.1 percent in Washington, D.C. The nation's capital is the only metro area in the index where prices have risen in the past year.
The Case-Shiller index measures sales of select homes in the 20 largest markets compared with January 2000. For each metro area it reviews, the index provides a three-month moving average price. By measuring sales prices of the same homes over time, the index seeks to pinpoint market values and conditions.
The housing sector is struggling even as the overall economy is in the midst of a steady but slow recovery.
That won't change soon. Roughly 92 percent of homeowners say it's a bad time to sell their home, according to the latest Thomson Reuters/University of Michigan index of consumer sentiment.
But housing also affects the broader economy. Homes account for about a third of household wealth. So when prices fall, they have "important spillover effects on other sectors of the economy," said Yelena Shulyatyeva, an analyst at BNP Paribas. Those sectors include consumer spending and state and local property tax collections.
Some of the sharpest price declines have occurred in cities hit hardest by unemployment and foreclosures, such as Phoenix, Tampa and Las Vegas. They are flooded with homes sitting vacant, awaiting buyers. Many banks have agreed to allow homes at risk of foreclosure to be sold for less than what is owed on their mortgages. That trend has pulled down prices.
Coastal areas, such as San Francisco, San Diego, Los Angeles, Washington and Boston, have fared comparatively better in the past two years. They have been aided by healthy local economies and low unemployment, desirable city centers and limited space for new housing.
But the damage is now spreading to areas that had long escaped the worst of the crisis. They include Dallas, Denver, Minneapolis and Cleveland. Economists regard them as housing bellwethers — metro areas that are reliable indicators of where national prices are headed.
Denver and Dallas are on pace to hit post-housing bust lows in the next few months.
In the seven years before its peak in July 2006, the home-price index surged 155 percent. Since then, it's fallen 33 percent.
Prices fell from February to March in 18 of the metro areas tracked by the Standard & Poor's/Case-Shiller 20-city index. And prices in a dozen markets have reached their lowest points since the housing bubble burst in late 2006.
The nationwide index fell for the eighth straight month. Prices have now fallen further since the bubble burst than they did during the Great Depression. It took 19 years for the housing market to regain its losses after the Depression ended.
Prices rose last summer, fueled by a temporary federal home-buying tax credit. But they've plunged since then. This month's report marked a "double dip in home prices across much of the nation," said David Blitzer, chairman of the Index Committee at Standard & Poor's.
After adjusting for inflation, the home-price index has sunk to a level not seen since 1999.
Many economists think prices nationally will drop at least 5 percent more by year's end. They aren't likely to stop falling until the glut of foreclosures for sale is reduced, employers start hiring in greater force, banks ease lending rules and would-be buyers regain confidence that a home purchase is a wise investment.
"Folks are having so much difficulty in getting financing for a home," said Mark Vitner, senior economist at Wells Fargo. "It may be early next year before prices hit bottom."
Another obstacle to a rebound in prices: A delay in processing foreclosures. Homes in foreclosure sell for, on average, 20 percent discounts. When they do, they pull prices down further. But many foreclosure sales have been delayed while federal regulators, state attorneys general and banks review how those foreclosures were carried out over the past two years.
Once those homes are eventually foreclosed upon, they will trigger a further price drop in many markets. Those declines are "etched in stone," said Patrick Newport, U.S. economist at IHS Global Insight.
The 12 cities now at their lowest levels in nearly four years are: Atlanta, Charlotte, Chicago, Cleveland, Detroit, Las Vegas, Miami, Minneapolis, New York, Phoenix, Portland, Ore., and Tampa.
Minneapolis fared the worst in March; prices there fell 3.7 percent. They dropped 2.4 percent in Charlotte and Chicago and 2 percent in Detroit. But prices rose 0.1 percent in Seattle and 1.1 percent in Washington, D.C. The nation's capital is the only metro area in the index where prices have risen in the past year.
The Case-Shiller index measures sales of select homes in the 20 largest markets compared with January 2000. For each metro area it reviews, the index provides a three-month moving average price. By measuring sales prices of the same homes over time, the index seeks to pinpoint market values and conditions.
The housing sector is struggling even as the overall economy is in the midst of a steady but slow recovery.
That won't change soon. Roughly 92 percent of homeowners say it's a bad time to sell their home, according to the latest Thomson Reuters/University of Michigan index of consumer sentiment.
But housing also affects the broader economy. Homes account for about a third of household wealth. So when prices fall, they have "important spillover effects on other sectors of the economy," said Yelena Shulyatyeva, an analyst at BNP Paribas. Those sectors include consumer spending and state and local property tax collections.
Some of the sharpest price declines have occurred in cities hit hardest by unemployment and foreclosures, such as Phoenix, Tampa and Las Vegas. They are flooded with homes sitting vacant, awaiting buyers. Many banks have agreed to allow homes at risk of foreclosure to be sold for less than what is owed on their mortgages. That trend has pulled down prices.
Coastal areas, such as San Francisco, San Diego, Los Angeles, Washington and Boston, have fared comparatively better in the past two years. They have been aided by healthy local economies and low unemployment, desirable city centers and limited space for new housing.
But the damage is now spreading to areas that had long escaped the worst of the crisis. They include Dallas, Denver, Minneapolis and Cleveland. Economists regard them as housing bellwethers — metro areas that are reliable indicators of where national prices are headed.
Denver and Dallas are on pace to hit post-housing bust lows in the next few months.
In the seven years before its peak in July 2006, the home-price index surged 155 percent. Since then, it's fallen 33 percent.
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248 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 7 users disliked this commentbeau Report Abuse
Last month Real Estate TV Talking Heads said "Home prices have bottomed out. Buy now! Buy now!!!"
Replies (9)
Which is what they said the previous month, and the previous month, and the previous month. Since all these suckers have got a pony in the race, it might not be wise to believe those whose incomes depend upon a house sale.- 215 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 6 users disliked this commentA Yahoo! User Report Abuse
Oh, but they still tax you as if the house was still worth what you payed for it. How convenient.
Replies (12) - 403 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 16 users disliked this commentdennis Report Abuse
The banks would like you to believe prices are rebounding.
Replies (19)
Not a chance till people started working again.
Try 3 to 5 years and then MAYBE.
In the 50s and early 60s homes appreciated at 1 to 2% in many areas at best. - 841 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 41 users disliked this commentRon Report Abuse
Buy a house to live in. Enjoy it, decorate it, fix up the yard. Be proud of your home. It's a place to relax, take a shower, and eat. If you think along these lines and not about making money on your home, you'll be fine. A home is not a bank. It's a home.
Replies (41) - 231 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 9 users disliked this commentMike Report Abuse
I just wonder how much of the good news for this market is by "speculators". As anybody might remember, both Las Vegas & Phoenix had bid up markets. Speculators drove the prices up only to unsustainable.
Replies (15)
Watch out California. Remember there is the shadow market (future short sales & foreclosures) the lenders have yet to place on the market because it would lower their yields on existing listings.
One last point. Jobs fuel the economy. Is California gaining considerable new jobs enough to sustain this upward movement of prices? - 204 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 10 users disliked this commentReport Abuse
I get so doggone confused!
Replies (21)
One day home sales are up and the next day they're down. I've even seen it where two contidictory articles were posted at the same time. It's almost like somebody is tampering with the data or something to give a false impression of recovery?
Then the other day I saved a link where the NAR said the had seriously overcounted home sales. This would mean things were worse than they told us?
So, in my confusion, I decide to go back to that link to figure it out. To my AMAZEMENT there was an entirely different article (under the same link) entitled "Existing home sales overcounting "minor": NAR". It literally reversed the information from before.
I don't know who to trust any more. - 285 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 16 users disliked this commentCMT Report Abuse
The government has been funding the hold back of already completed foreclosures from hitting the market. This artificially and temporarily keeps prices higher than they would be if all foreclosures hit the market causing an oversupply. The timing was kept to Feb. of this year to keep it from becoming an election issue. Also, there are a lot more foreclosures coming down the way because banks can't process them quickly enough now that some of them have been caught electronically processing them without manual review as required by law.
Replies (12)
Pricing is a perception of value. With an oversupply, prices will become lower again but most markets will reach a bottom as many properties just don' t have enough equity and banks or owners can't afford to sell short by more than a certain amount. We should see bottom soon as economically, house prices can't get lower. But hold on to your hats folks because houses will drop another 20 - 25% in many of these overspeculated markets. - 185 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 9 users disliked this commentPaoli Pete Report Abuse
Rising median prices just means that fewer low price houses are being sold . . . not that property prices are rising overall. Data quick reports that higher end houses are capitulating to price pressure and foreclosures are creeping upmarket. That increase in median values is not a good sign.
Replies (2) - 774 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 62 users disliked this commentKT Report Abuse
If any of you people believe anything these politicians say about their commitment to a strong U.S. economy then you haven't been paying attention to history.
Replies (70)
Here is a sobering bit of reality:
• Currently, some 45 million Americans are living in poverty
• Over 30 million people on food stamps; many are first-time-ever recipients
• 8 million jobs lost since the recession began; many employed have experienced income reductions
• Real unemployment at 16%; for minorities and teens it’s at 23%
• A total of 9.2 million people are currently claiming unemployment benefits. Regular state programs provide to 42% of them; emergency and other types are also available.
• Since 2008, state and local governments have been drastically curtailing/cutting services and programs, as well as laying off workers by the hundreds of thousands per year
• Values of retirement portfolios eroded by 20% (especially 401Ks and mutual funds)
• Since Dec. 2007, at least 3 million homes already lost due to foreclosures. RealtyTrac Inc. predicts some 1.2 million more owners will lose their homes in 2011
• Many homes’ values dropped by 20%, or more in some areas
• Our GDP is 75% driven by domestic consumer consumption
• We have no substantial manufacturing base; our economy is 75% service-oriented
• The U.S. national debt now exceeds 14 TRILLION dollars
• The United States currently functions as Latin America’s de facto “welfare system”
• Meanwhile, the federal government plans to make some 25 million unauthorized immigrants eligible for a mass amnesty program. (Already, the U.S. is unofficially a dual-language country.)
• Oh yeah, the poor keep getting poorer; and the middle class is—slowly but surely—disappearing. But somehow, the rich just keep getting richer. (Go figure!)
[translation]
The US economy is currently running on life-support. The gap between the rich and the poor is increasing. The nation's overall standard of living is not simply eroding: it’s experiencing free-fall.
America is being transformed into a contemporary version of a third-world nation. The precursor is a state of the economy where there is a tremendous surplus of cheap labor and many more people being dependent upon government aid. Also, it necessitates a inceased number of ignorant and compliant voters.
The writing is on the wall: the federal government wants the citizenry to substantially lower its expectations as to what constitutes the "American Dream."
[/translation]
[bottom-line]
It’s all about transferring vast amounts of wealth, primarily from the middle class to the ruling class. At the highest levels of power, in business and in politics, the very wealthy are truly united. In the final analysis, it’s not about liberals versus conservatives, democrats vs. republicans, the right vs. the left, or other artificial dichotomies. And, if you succumb to such classifications, then you fall victim to the divide-and-conquer strategy of power elite.
Americans, wake up and take your heads out of the sand! Look at the patterns and connect the dots. Complete globalization and a one-world government are just around the corner. This is what the global elite mean by a New World Order; and it is all courtesy of them. (Thank you very much!)
[/bottom-line] - 268 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 20 users disliked this commentrockguy Report Abuse
Gee, the Government and Wall Street have been telling how swell the economy is
Replies (8)
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