Home prices in November dropped 18.2 % from a year earlier, not quite as bad as economists had expected, but still the steepest plunge on record, according to the Standard & Poor’s Case-Shiller Home Price Index. Prices in 11 of the 20 metropolitan areas surveyed fell at record rates, and 14 areas reported double-digit declines from November 2007.The 20-city index for November fell to 154.59, its lowest point since January 2004.
Some analysts foresee worse to come as the declines are still accelerating. The problems were most pronounced in parts of the country like southern California, south Florida and the Southwest, where prices of houses and land once doubled, or even tripled, in a single year, and developers rushed to lay out quilts of new subdivisions and build as many glass condos as they could.
In the Phoenix metro area, home prices fell 32.9 percent in November from a year earlier, and they tumbled 31.6 percent in Las Vegas. In the San Francisco metropolitan area, prices declined 30.8 percent from last year.Not one of the 20 cities in the index posted a gain in prices from October to November, or from last November to this year. But Denver and Dallas fared the best, with home prices in Dallas falling 3.3 percent from last year, and 4.3 percent in Denver.
Doom and gloom is the order of the day as unemployment has risen to 7.2% nationwide and over 9% in California. Every day on the news we hear of massive new layoffs. People’s retirement accounts have shrunk to nothing due to the plunge in the once-buoyant stock market. Tuesday’s home price numbers were the latest sign that the housing market, which lies at the heart of America’s economic downturn, is still in tatters.
Aside to home values, what do we have to fall back on: home values, right? Yet, the continuing erosion of housing values poses a threat to millions of Americans who overreached to take on big mortgages or home equity loans, gambling that ever-rising home prices would keep them above water.
Flip that coin over, though, and you have the mini-boom that is seizing some parts of the country, prompted by values tumbling due to foreclosure , forced sales and short sales. Rock-bottom prices have lured buyers back into the market. The National Association of Realtors reported Monday that existing-home sales rose 6.5 % t in December, the largest monthly bounce in years.
This ray of sunshine give some reason for optimism to the beleaguered real estate business which has itself shed thousands of jobs.
The fire sales in depressed markets like southern California, suburban Las Vegas and Florida have helped to chip away at a glut of unsold homes. Housing inventories at the end of December fell 11.7 % from a month earlier, to 3.68 million homes, down from 4.2 million unsold homes in November.
Will prices be coming back? Apparently, not anytime soon…