Network News

X My Profile
View More Activity
2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Home Prices Plunge Record 19.1 Percent

UPDATED at 11:28 a.m. with data from individual cities:

Home prices across the nation plunged a record 19.1 percent in the first three months of this year compared with the same period last year, according to the S&P/Case-Shiller National Home Price Index.

In Washington, prices were down 18.4 percent in March compared to March 2008.

This is bad news for hopes of a recovery. Even though stocks are showing a rebound -- more than a 25 percent gain since their early-March lows -- the nation's housing market continues to founder and in fact worsen. The index dropped 18.2 percent last quarter.

Despite low mortgage rates and dropping prices, home values continue to plummet thanks to an excess of inventory. The United States has a more than 11-month inventory, or supply, of unsold housing. Until that burns down to a two- or three-month supply, the housing market will see no recovery and prices will continue to drop.

Home prices in the nation's largest 20 cities dropped a record 18.7 percent compared with the first quarter of 2008.

UPDATE:

-- Phoenix and Las Vegas, two of the most overbuilt cities in recent years, showed declines in home prices of more than 30 percent. So did San Francisco, which may be a sign of the loss of affluence. It's very difficult to build new housing in San Francisco, owing to a height restriction, the fact that it's on a peninsula and has so many historic properties, so it's not a problem of excess inventory in SFO.

-- Charlotte and Denver had the best performance among the 20 cities surveyed tracking prices from February to March of this year. Home prices in each city edged up 1 percent over that one-month period.

-- Frank Ahrens
Sign up to get The Ticker on Twitter

By Frank Ahrens  |  May 26, 2009; 11:28 AM ET
Categories:  The Ticker  | Tags: Case-Shiller, home prices  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Consumer Confidence Soars in May, Markets Surge
Next: GM Inches Closer To Bankruptcy -- Or Complete Govt. Bailout

Comments

Using 2000 as the baseline, it's easy to see how over inflated housing is and how much easy money played in it.

It's really simple economics here. Prices have to come back down to near 2000-2001 levels because almost all the gains from 2000-2007 were just not 'real'...they were all from giving loans to anyone that could breathe which created false demand which created false appreciation. This isn't a hard concept to follow yet those that have vested interest in those markets refuse to believe this. Just look at the Washington Post chart and you'll see how absurd things got.

http://www.washingtonpost.com/wp-srv/business/graphics/2009/homeprices/?sid=ST2009052402328

Stabilizing housing doesn't do anything because it keeps them over priced at inflated values. Let the market sort itself out and we'll get back to 2000-2001 prices in another year or so and then we'll see modest appreciation.

Lastly...how about housing be used for housing, not flipping, quick income, etc. We need some new rules in place.

20% down, 30% down, no more then 40% of your take home income can be your mortgage payment.

The 20-30-40 rule.

Posted by: cavatellie | May 26, 2009 12:06 PM | Report abuse

Correction: the 20-30-40...the 30 part was meant to say 30 year loan.

So 20% down, 30 year loan, no more then 40% of your take home income for the monthly payment.

Posted by: cavatellie | May 26, 2009 12:26 PM | Report abuse

The comments to this entry are closed.

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company