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The 20-city S&P/Case-Shiller home price index set a new record for decline, down 18.2% in November compared to November of 2007. (cleanmpg.com/forums/showthread.php?p=183301)

http://www.cleanmpg.com/photos/data/501/Home_Forclosure.jpgWayne Gerdes – CleanMPG (cleanmpg.com) – Jan. 27, 2009

Foreclosures are not helping the situation.

There are many definitions for recession and depression and from the fall off in home prices, we are quickly moving toward the “D” word given the home price declines experienced around the country over the past two plus years.

According to a report released by the S&P Corporation today, Real Estate prices are continuing their freefall with no signs of bottoming. The Standard & Poor's/Case-Shiller home price index, a closely watched indicator of home prices, reported on Jan. 27 that price declines of existing single-family homes in 10 major metro areas matched last month’s record decline of 19.1%. In addition, the 20 major metro areas continued their slide, down 18.2% compared to the same month in 2007. The index has declined steadily for 28 consecutive months.

Eight of the 20 metro areas surveyed in the report (Atlanta, Boston, Charlotte, Chicago, Dallas, New York, Portland and Seattle) showed record rates of annual declines, while 14 reported declines in excess of 10% vs. a the same period a year ago. The metro areas with the largest year-over-year price declines included Phoenix, Las Vegas and San Francisco falling 32.9%, 31.6% and 30.8% respectively.

“The freefall in residential real estate continued through November 2008,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “Since August 2006, the 10-City and 20-City Composites have declined every month – a total of 28 consecutive months. Every region was down in excess of 1% for the November/October period, with eight of the regions recording record monthly declines.”

Dallas and Denver faired the best in November, in terms of relative year-over-year returns. While in negative territory, their declines remained in low single digits of -3.3% and -4.3%, respectively.

Average US Housing Price Index

http://www.cleanmpg.com/photos/data/2/S_P-Schiller_US_Home_Price_Indices.jpg

I believe that this fall is just a readjustment of prices that got too high due to easy credit.

In locations where credit isn't easy to come by, real estate is much less expensive. While I was in Turkey I observed this first hand. Credit was almost impossible to get (mainly due to a 75% inflation rate). Because of this land was selling for a lower percentage of the annual income.

Rent for a decent 1 bedroom apartment was $50 a month (we were charged more since we were "rich" Americans, but I had some good local friends). Just try to find something like that around here.

The current home prices should be much lower still, but won't drop as far as they should to make up for the artificial bubble we experienced.

Hopefully they can keep this in check, the news is blaming their industry for what happened to my industry, and mine for screwing up the rest of the world economy hand-in-hand with the oil industry.

Hopefully they can keep this in check, the news is blaming their industry for what happened to my industry, and mine for screwing up the rest of the world economy hand-in-hand with the oil industry.

I don't blame the housing industry for what happened to the auto industry. I blame the (too) easy credit for both of them.

With the too easy credit people bought what they could barely (or just plain couldn't) afford, and then they couldn't afford the gas (becuase they didn't pay any attention to FE when they bought vehicles), so they used more credit (plastic to the rescue?) to buy that.

Yes, the housing industry was the most visible to begin with, but it was all credit related. Foreclosings increased, was this a housing problem? No, it was a credit problem.

And then the interest rates went up at the same time as the gas prices, a double hit for those who had chosen ARM mortgages.

It's the banks (with some government intervention) that caused it all by giving credit to people who couldn't pay the bills.

It was a bubble, pure and simple, driven by speculation and easy credit. I don't think we have seen the end of falling prices yet. If one studies the curve, the out-of-control speculation started somewhere around 1999-2000. Until we get back to some level in approximately the same area, with perhaps a slight growth for inflation, we aren't going to see stability, IMHO. Wife and I are shopping for a primary home for our "post RV travel" days. I'm still seeing excessive pricing in southern PA and around Charlotte, VA. Got money to buy, but I'll be damned if I'll overpay and take on someone else's bubble.

I think I came into it too young, credit is getting easier for me, not harder. This is going to take quite a while to correct itself. :(

Home prices here in KC haven't followed that curve. Prices here seem to follow the cost of construction, which rises steadily and modestly.

My sister and brother in law bought a beach house in LA in 1998 for $300,000. Nine years later, they sold it for $1,250,000. That kind of appreciation defies logic. They got out about the right time though and they rent the place back from the current owner.

Columbia is another one of those places where prices have risen slowly, missing the worst of the bubble. I'll never make any money on my house but I'm not likely to lose my shirt on it, either. (And at least when I bought, you could get roughly twice the house for half the money relative to the Boston market that I'm used to.) The only problem right now is that selling takes longer than it used to since there aren't as many people in the market.

Home prices here in KC haven't followed that curve. Prices here seem to follow the cost of construction, which rises steadily and modestly.

My sister and brother in law bought a beach house in LA in 1998 for $300,000. Nine years later, they sold it for $1,250,000. That kind of appreciation defies logic. They got out about the right time though and they rent the place back from the current owner.

Missouri, in general, isn't as affected as many other places. The homes here didn't appreciate as quickly as other places. There has been some, but instead of housing prices dropping abruptly, they have dropped slightly or remained steady.

We bought our home just over 2 years ago (seems like the wrong time doesn't it?).

2,700 sq feet, 4 bed, 3 bath, full dining room, living room, family room, large kitchen, utility room on the main floor, 2 offices (one in the basement), 5.5 acres, pool, full basement (that includes the 3 car garage), all for less than $150K (appraised for $165K).

We have put some work into it:
Finished the basement, adding 1300 sq feet of living space, full bathroom (with whirlpool tub), full bedroom (with closet), 20'x30' gaming room (with 300 sq foot of built-in bookshelves and a mini-bar), and a gym.

We still have some work to do, but it's worth well over $200K right now. Not bad for spending less than $15K on improvements.

The bubble was certainly not uniformly spread. If one looks at the actual Case-Shiller data here:

http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html

it is obvious that there are lots of regional variations. I think Las Vegas was worst, San Francisco next, and somewhere in in Florida. Many areas in the heartland did not rise so rapidly. But, there are still some hot spots in some states. Charlottesville, VA rose rapidly because it became recognized as a highly attractive retirement location. (Priced me out of consideration - particularly considering VA taxes.). Also, there are many individual cases where folks read the hype and overpaid in many locations. Those house are currently "locked" and cannot move. We looked at one in southern PA, not a hot spot in general, which will never sell until the price comes down by 25-30%. The Case-Shiller data is interesting, but it is averaged data and doesn't tell the whole story when it comes to specific properties.