Tuesday, December 30, 2008

Price drops accelerating

The price drops are accelerating (again).

Home prices continued to drop in October, according to the S&P/Case-Shiller home-price indexes, with home prices in the Sun Belt continuing to be hit hardest.

“The bear market continues; home prices are back to their March 2004 levels,” said David M. Blitzer, chairman of S&P’s index committee. He added that both composite indexes and 14 of the 20 metropolitan areas are reporting new record declines. As of October, the 10-city index is down 25% from its mid-2006 peak and the 20-city is down 23%, Blitzer said.

The indexes showed prices in 10 major metropolitan areas fell 19% in October from a year earlier and 3.6% from September. The drop marks the 10-city index’s 13th straight monthly report of a record decline. In 20 major metropolitan areas, home prices dropped 18% from the prior year, also a record, and 2.2% from September. None of the regions was able to stave off a decline from September to October.

Metro Area October 2008 Change from September Year-over-year change
Atlanta 119.77 -2.4% -10.5%
Boston 159.17 -1.1% -6.0%
Charlotte 128.02 -1.8% -4.4%
Chicago 145.49 -1.6% -10.8%
Cleveland 108.76 -1.0% -6.2%
Dallas 120.60 -1.1% -3.0%
Denver 129.05 -1.5% -5.2%
Detroit 86.10 -4.5% -20.4%
Las Vegas 142.57 -2.7% -31.7%
Los Angeles 179.82 -2.6% -27.9%
Miami 173.42 -3.0% -29.0
Minneapolis 135.71 -3.4% -16.3%
New York 190.04 -0.9% -7.5%
Phoenix 135.18 -3.3% -32.7%
Portland 166.44 -1.9% -10.1%
San Diego 159.12 -3.0% -26.7%
San Francisco 139.44 -4.2% -31.0%
Seattle 170.45 -1.4% -10.2%
Tampa 165.44 -3.4% -19.8%
Washington 184.92 -2.7% -18.7%

This isn't really news to readers of this blog. It does illustrate that the bottom ain't anywhere close though. Accelerating price drops are an good indication that there's still a long way to fall. This is the same pattern we saw last year in this area. The prices were sticky until late in the year as sellers were hoping that the late summer buyers would save the day. When that didn't happen the prices really took a big fall in the winter. This year will probably mirror that. With a flood of REO's poised to hit the market and buyer sentiment at all time lows the chance of prices stabilizing are slim.


Tyrone said...

Truly shocking... NOT!

JORDATO said...

Hello Golfer,i would like your opinion on 2009 with all the recast for alt-a and pay option arm resets,possible commercial real estate bust,car payment bust,credit card payment bust, student loan payment bust,and according to Beacon economics unemployment is currently at 9.5% in i.e, and also according to Beacon people are migrateing from i.e. to cheaper states do you have a possible positive outlook for us i.e. residents for 2009 and also with these predator loan mods that FDIC is offering people that are in NOD with Indy Mac and others if consumers go for these crazy loan mods that make you be a renter for life in the same property do you feel the best thing to do is for people to walk away.Have a Happy New Year you and your family thank you so much for the work you do and thank you for your consideration

golfer_X said...

The resets for the option ARMs should keep the supply of foreclosures fairly high for the next few years. I am a little worried about the credit bust. There are a lot of people living off credit cards right now. I personally know quite a few using plastic to survive. Once those folks hit the limits of their cards the economy will take another double hit (defaults and less spending).

I'm not sure the Alt-A bust will be as bad as some. I think a lot of those loans have already gone bad. Some experts have said 100% of those loans will fail. Optimists say 70%. But how many have already fallen? Do they count the ones that have already gone back to the lenders or been sold? I don't believe they do. I would say a better way to estimate is to take the total number of homes sold (in the IE) between 2001 and 2007 and figure a high percentage will go bad (60%). Some will stay and pay but just as many older vintage purchases will fail due to equity extraction. The total sales for the IE was around 100k a year during the boom years (Some of those were the same homes selling multiple times though). So let's take an optimistic rough SWAG and say we will see 400k homes lost in the IE to foreclosure over the duration of this bust. That means there is still a lot of foreclosures left.

I think 2009 will be a worse year over all than 08. Unless Obama can somehow pull a rabbit out of his butt I don't see anyway things will be better in 09. The correction is going to happen regardless of what the government does. Their meddling though could make it 20 years long versus 10 years if they stay out of it.

Renee' said...

Hope you all are having a safe New Years Eve...I am sitting here with you fine folks...drinking a Tequilla Sunrise and fighting a horrible head cold.

I heard predictions today on a few of my talk radio stations that indeed 2009 will be worst than 2008when it comes to just about anything "credit". It's no surprise for most of us that frequent this blog.

As I have blogged before - I am seeing home prices falling considerably over the last few weeks - not just thousands but tens of thousands...and of course I see some of these homes listed as "fixers" and the list price is at Prime Rib prices instead of ground round.

You know though - the IE is not the only one coming down in housing prices - the O.C. is starting to show signs of price reductions as well.

Obama isn't going to be able to pull any kind of animal out of his butt as of January 20th - I do however thing that he is going to push the Feds to bring back the down payment assist. programs though...