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The best that can be said about S&P/Case-Schiller numbers out today is maybe home prices can’t fall any faster. Prices for Q1 of this year dropped at 19.1%, .9% more than they dropped in the last quarter of ‘08. The 20-city index dropped 18.7% year-over-year, also a record. It fell 18.5% during the last three months of 2008. This index has plummeted 32.2% from its July 2006 peak and has fallen 32 straight months.
The Wall Street Journal has a great sortable chart here. The biggest surprise in the numbers is in Minneapolis which suffered the worst quarterly decline, 6.1%, and is down 23.3% from a year ago. It ranked ahead of even Detroit, the #2 on the list with results of 4.9% for the quarter but which was down much further Y2Y at 25.7%. I suspect Detroits values should be one of the first areas where prices will stabilize (eventually) if only for the reason that they have hit bottom faster.
Twin Cities Realtors are reporting a slightly different result. They report that the median sale price for a home in April was $153,000 — the fourth month in a row where the median price in the metro area stayed between $150,000 and $155,000. Leading some Realtors to suggest that prices may have stabilized. The reason for this difference is that Realtor numbers are based on the median price of all houses sold in a given month whereas Case-Shiller looks at homes that have sold in a month, and compares the sale prices with what they previously sold for.
The oddest numbers in the survey come from Phoenix which was both over-developed and over-financed during the bubble and has take a huge hit in home values as a result. While prices were down 36% Y2Y according to Case-Shiller, the rate of decrease seems to have slowed.
According to an Arizona State University report. homes “sold for a median price of $117,500 in April, down from a $119,000 March estimate, $121,000 in February and $130,000 in January. Not long ago, prices were dropping by $10,000 to $12,000 a month.” This may be the result of speculators buying the now steeply discounted housing. The New York Times reports,
At these new lower prices investors are finding they can sometimes make money and keep the previous owners in these properties by charging them less in rent than they had been paying on their mortgages. However some comments make me wonder how much people have learned from all this.
“I bought too high a few years ago,” said Jason Fischbeck. “It cost $225,000. Now it’s worth $110,000. So I just paid $80,000 cash for another. ”
I hope for the sake of all of us that this gamble turns out better than previous one.
Constantine von Hoffman is a veteran business journalist and social media consultant. He write the blog CollateralDamage, a satirical look at marketing and business.
Last 3 posts by Constantine von Hoffman
- The home price increase that isn’t - July 28th, 2009
- Why the increase in housing starts means trouble - July 21st, 2009
- Builders, Realtors attack new regs on home appraisal - July 14th, 2009
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