Western Cities Top U.S. Home Price Declines

As we typically do each month, below we highlight some updated housing charts based on the most recent S&P/Case-Shiller Median Home Price indices. The first table below shows the percent change from each city's peak median home price (most occurred in 2006) to its current level (November 2007). As shown, the composite 10-city index is down 9.4% from its highs. San Diego has fallen the most at -16.3%, followed by Miami (-15.3%) and Las Vegas (-14%). Chicago has fallen the least from its peak at -4.1%. Denver, New York and Boston are the other 3 cities that have fallen less than the composite index.

click to enlarge

The charts below are historical monthly year-over-year percent changes in home prices for all 20 cities that S&P/Case-Shiller track. We also include the composite 10-city and 20-city indices.

Comments

[Greg Pinelli:]

Couldn't happen to a nicer group of overrated, overhyped places. One of the side benefits to this long overdue return to Earth is that there will be far fewer Real Estate Agents around when the dust clears.
When buyers are faced with not even having their full priced bids seriously considered in places like San Francisco you had to know the foundation this mania was based on had all the substance of Cream of Wheat. My best wishes also to all those arrogant "house flippers" driving around in their unpaid for Mercedes'...good luck with trying to make a buck selling your over prepped boxes. Foreclosure will really
pep up that investment resume!

2008 Feb 05 05:20 PM

[Reinko:]

Given the relation between median household income and median house prices (banks only lean you a certain multiple of your income) it is expected that the 20 city index will fall 50% from it's peak while San Diego/Miami/Vegas area's will get hit harder.

So we ain't there yet!

By the way, I love those Case Shiller graphs so much. They abundantly show that Alan Greenspan never grasped what macro eonomics is after all... Oh oh the fool Alan, is 5000 years of hard labor in the prison enough?

2008 Feb 05 06:47 PM

[Long-Short Guy:]

The Eastern cities might be falling less because of foreign buyers entering the E Coast market. The falling dollar is now leading to much higher levels of foreign purchases in cities like NY.

2008 Feb 06 01:40 AM

[GregY:]

I am still looking for these wonderful bargains in San Francisco, but 500K for 645 sq.ft. studio doesn't appear as a good deal to me.

2008 Feb 06 03:46 AM

[mavericks:]

Why blame Greenspan? He's a common scapegoat but frankly, he was a brilliant Fed chairman...hardly a fool. Blame the financial institutions for their lax lending standards...they're the ones to blame. Just because your parents give you the house to throw a party for your friends doesn't give you the right to break into the liquor cabinet.

2008 Feb 06 09:29 AM

[bullbleep:]

Interesting charts on city-by-city basis. What would be even more instructive would be the same charts, but adjusted for actual inflation during the same period. The charts as presented suggest that the bubble now has been retraced, with no more than a 10% decline from 1990 prices.

If you assume, say, a 100% inflation rate during that period (the price of gold suggests an actual inflation rate of about 350%, incidentally), then housing has declined over the past 15 years or so by the full measure of the past year (40%). I suspect the real graphs would show slow, steady price erosion until last year, when housing fell off a cliff.

The graphs in this article suggest a return to the mean and a bottoming today. Inflation-adjusted graphs would suggest a plummet into the abyss with much more plummeting to come....

2008 Feb 06 09:41 AM

[Jay Jay:]

Yes Maverick blame Greenspan. What did he do that made him so great? All he did was the easy thing, just keep easing everythime the market tries to correct. Just keep running down hill. Eventually you reach the bottom of the hill and have nowhere to go, thats where we are now. So instead of have several small corrections, we're going to have one big disaster. The market players were just doing what you'd expect when put in an interest rate environment created by Greenspan.

2008 Feb 06 09:59 PM

[Dave_O:]

I'm confused. I thought the decline in real estate prices in 2007 was just a blip, according to the nation's leading expert of real estate, Lawrence Yun (chief economist of NAR) - www.blogtoplist.com/ou.... Clearly these graphs, even for non-western cities, show that it's more than just a "blip". Someone is incorrect.

2008 Feb 07 12:16 PM

[User 200405:]

Those graphs show rates of CHANGE, not absolute prices! The curves show a dramatic shift in direction, but not a a "drop off the cliff" for places like Chicago.

That said, this correction does seem likely to continue. George Soros believes we're less than half way through the correction, and that prices will overshoot on the way down (i.e. become too cheap) in much the same way they overshot on the way up.

So yes, it's "just a blip" in overall price in most places (a 10% decline after a 100% gain is a blip, unless you bought at the top, took out an interest-only mortgage, or borrowed against your property beyond your means), but it's much more than a blip in the sense that there has been a sea-change in attitude, and a second bubble is unlikely right away, so even after the bottom is reached, appreciation is likely to be slower than people became used to the last few years.

2008 May 27 12:37 PM