Home Prices: How Low Can You Go?

Standard and Poor's released the March data (.pdf) for the S&P/Case-Shiller Home Price Indices showing a 14.4 percent year-over-year decline for the 20-City Composite Index, the steepest decline on record. Indices for individual cities are shown below:

On their current trajectories, Los Angeles and Miami should overtake Washington D.C. and New York within a few months.

David M. Blitzer, Chairman of the Index Committee at Standard & Poor's noted:

The steep downturn in residential real estate continues. There are very few silver linings that one can see in the data. Most of the nation appears to remain on a downward path, with 19 of the 20 metro areas reporting annual declines, and six of those now at negative rates exceeding -20%. Looking closely at these returns, you can see that 15 of the metro areas are also reporting record lows, and eleven are in double digit decline, with Chicago being the latest metro area to join these ranks.

The monthly data paints a similar picture, with 18 of the metro areas reporting at least seven consecutive months of negative returns. For the first time in as many months, we finally saw monthly price appreciation in two of the metro areas – Charlotte was up 0.2% in March over February, and Dallas was up 1.1%.

In tabular form, the data looks like this:

Charlotte remains the only metropolitan area in the index with a gain from year ago levels with a modest 0.8 percent increase, down from last month's year-over-year gain of 1.5 percent.

Comments

[vaduz]

just by simply comparing there seem to be many aeras ready to decline more.

[johndough110]

MEDIAN prices are always reduced when foreclosures are prevalent. Even CASE of Case-Shiller is on record stating the media bias is over-blown at this point.

[CarlosSlim]

How low can you go?

I'd guess--down to the rental value.

When Rent = Buy, then it's better to BUY.

When Rent < Buy, then it's better to RENT.

Most of the time, Rent < Buy.

That's why RESIDENTIAL single family Real Estate is a *bad* investment.

Rent and invest the difference!

If your landlord gives you 30 days notice--simply move to another rental, no big deal!

[Tamir]

Thanks for the report. It is very interesting. I guess the big question is what will happen next in each city?

[Observor]

Some curves show that in some areas are getting into the "over correction" region. Is housing a good investment depends on area. If you fly over LA, you know why "land is limitted resource". With the material, land, and labor cost going up, today's cost of build a home is certainly more than 2004.

[cino]

this chart is ok IF u live in those areas. it doesn't mention some major metro areas that r performing OK like Philadelphia.
that's ONE problem that's perpetuating poor housing #'s – using national data across the board.

[accountant]

What am i missing, or are there data errors in chart. the blog states that charlotte is the only metro with a year to year increase - that being 0.8%. What about Atlanta and Minneapolis? Are their data incorrect as presented?

Additionally, i think the data is getting skewed. My guess is that owners of the more expensive homes are simply sitting tight for now, to the extent possible, until this mess blows over. As such, you don't have as many high end homes on the market to lift the averages. It woudl be interesting to compare the assessed values of the homes sold a year ago versus those sold this year (using a constant assessment). My guess is that lower value homes on average are the ones getting sold.