Home prices fell 6.7 percent in October, compared with a year ago, according to the S&P/Case-Shiller 10-city home-price index, a record drop as housing markets continued to deteriorate.It was the largest drop in more than 16 years and marked the 10th consecutive month of price depreciation and 23 months of decelerating returns.
"This is just the beginning," said Peter Schiff, a Darien, Conn.-based investment adviser known for his bearish views of the housing market. "Pressure is there for much, much lower prices."Miami was hit with a 12.4 percent decline in the month, the most of any area. Tampa fell 11.8 percent and Detroit, 11.2 percent. Sun Belt cities have suffered deep losses with San Diego down 11.1 percent in the past year, Phoenix off 10.6 percent and Las Vegas 10.7 percent. In Los Angeles, a huge market, home prices have fallen 8.8 percent.
In the Washington, DC area the price index fell 7.0% compared with October 2006 . Prices continue to fall in the Washington, DC metropolitan area. In real dollars prices have fallen about 10% this past year. For more numbers go to Case Shiller S&P Index. The prices declines in the metro area are accelerating with the Case Shiller S&P Index showing October prices declines of over 1.1%. For comparison purposes in October 2006 prices fell .4%.
This housing bust is accelerating, spring will not stop further prices declines in the Washington, DC area. Be careful falling knives are dangerous.
Posts
David,
ReplyDeleteThe acceleration is getting rapid. We do expect it to be continue to get worse during the traditional slow season of October through February.
The peak for DC was May 2006. Prices are down 9.7% (through October) from the peak. Nothing I hear indicates anything but further acceleration in price declines. (Sales are certainly slowing further and sales lead prices.)
Got popcorn?
Neil
I live in the Columbia area outside of D.C. The malls were deserted two days before Christmas! I couldn't believe it. There were no huge crowds and no long lines. My husband and I never thought the housing mess would affect the D.C. area. As a military family we are also starting to hear stories about military families in trouble because they can't sell thier homes which they have to do because they are relocating to another post. I'm glad we decided to rent!
ReplyDeleteMy wife and I are prospective buyers waiting and watching home prices fall in the Pimmit Hills area of Falls Church. We are probably going to buy this year, but not until the (still) high prices for 1000 - 1300 Sq foot homes in the area fall more than they already have.
ReplyDeleteThank you - the information and links are very informative. I own and live in dc, so am somewhat surprised and relieved to see the prices holding steady in the city, versus declining so far. When i tried the sales trend searches by specific zipcodes, the results were also interesting - e.g. 20009 declined from YOY but 20001 appreciated. It's great to have such ready access to specific data. I am thinking of buying again in the city sometime next year, so i think i can take my time - there's no benefit to rushing!
ReplyDeleteAnonymous said...
ReplyDelete"I live in the Columbia area outside of D.C. The malls were deserted two days before Christmas! I couldn't believe it. There were no huge crowds and no long lines."
Wow, this is interesting since the news reported that this was the most successful holiday season to date saleswise ... And I noted that everywhere I went it was jam packed. It starting to look like the re-alignment I predicted in conjunction with the changes in the global economy is happening. I.e., the gap between rich and less-rich areas is widening.
According to the detailed S&P spreadsheet, prices in the DC area are down as follows from peak levels (by tier):
ReplyDeleteLow Tier(Under $363,419) -8.1%
Middle Tier($363,419 - $523,613) -10.4%
High Tier(Over $523,613) -6.5%
Aggregate(Overall DC Market) -9.7%
" I predicted "
ReplyDeleteLOL
It is the return of Lance, the amature pan-global economist!
He may not know what is going on in his zipcode, but he can sure make buzzword laden predictions about the future of global commerce!
Wow, this is interesting since the news reported that this was the most successful holiday season to date saleswise ...
ReplyDeleteSales up 3.5%.
Store number up 5%.
Inflation at ??
Record overhang of unsold inventory! Oops.
The strong retailers are growing and profitable. 2/3rds are weak. Cest la vie. Warehouse stores did well yet department stores aren't doing so well. All of the retail analysts are predicting the sector will shrink in 2008.
Look at San Deigo's high end real estate prices. DC is trailing, but by less than a year. (I still haven't figured out *why* San Diego leads the nation in bubbles and busts... I'll just accept that it does.) Soon high end DC will be in the bust.
Home prices are dropping everywhere. Thus investors are pulling money away from mortgages. Soon we won't have those silly competitors who bid far beyond their income. The psychology is turning. We're going back to sound down payment requirements. :) This will slow the market further. Sellers will have 'fun' with that. Now we find out where the flippers bought. ;)
Got popcorn?
Neil
"lance" said:
ReplyDelete'Wow, this is interesting since the news reported that this was the most successful holiday season to date saleswise ... And I noted that everywhere I went it was jam packed. It starting to look like the re-alignment I predicted in conjunction with the changes in the global economy is happening. I.e., the gap between rich and less-rich areas is widening.'
lancity-lance-lance...
Using a boutique loan product to leverage yourself into a crappy rowhouse doesn't make you "rich."
Columbia is a pretty rich area.
ReplyDelete"Using a boutique loan product to leverage yourself into a crappy rowhouse doesn't make you "rich." "
ReplyDeleteEspecially when said rowhouse's value begins to drop almost as soon as he bought it...
There are already far larger and nicer houses within a few hundred feet of his available for what he paid in 2005.
I guess Anonymous 7:35 can't read. I said the gap between rich and less-rich areas. The poster had referenced Columbia when expressing that he/she didn't see much shopping go on. This in spite of the fact that it was a record year out there for Holiday sales. Within the Washington metro area, Columbia is one of those "less-rich" areas. I never said anything about my own personal situation. But I guess you can't read. Could there be a correlation between your reading problems and your being unable to get yourself in to a house?
ReplyDeleteDavid,
ReplyDeleteIs there any news on new home construction/sales directly on DC? Do you have a recent link?
National: 46,000 sales, 505,000 new homes in the inventory! Yes, over 9 months of (seasonally adjusted) inventory! (Anything above 3 is bad...) calculated risk did an excellent article this morning. :)
However, there is some very positive news. Berkshire Hathaway is entering the bond insurance market. This, in my opinion, is huge. With all the current bond insurers being downgraded out of business, they'll be able to demand high returns and it will allow new issues a better chance.
Any bets Warren will dictate higher down payments on mortgages (or at least the CMBS he'll insure)? He's not known for his patience with 'exotic products.' This is a good thing. It will ensure buyers can keep their homes. (Ghad... when the option ARM foreclosures come in 2008/2009, it will scare even us bears.)
Got popcorn?
Neil
"Could there be a correlation between your reading problems and your being unable to get yourself in to a house?"
ReplyDeleteCould it be your delusions of grandeur explain why you overpaid at the top of the biggest RE bubble in living memory?
"lance" began his drivel with:
ReplyDelete"I guess Anonymous 7:35 can't read. I said the gap between rich and less-rich areas..."
Sorry, "lance," I own a SFH uptown. Bought nearly 10 years ago. I became a "bubblehead" as you call them when I saw prices out of line with reality and economic fundamentals.
With respect to your past comments, you have indeed inferred, if not outright claimed, that you are somehow "better" than everyone else because you have an insane mortgage on a overpriced rowhouse in a crappy area.
Back to our scheduled programming.
Lance wrote: "But I guess you can't read. Could there be a correlation between your reading problems and your being unable to get yourself in to a house?"
ReplyDeleteI've also noticed the BH's miss the point over and over.
This might explain the problem, found it in today's Washington Post Comments,
"Ombudsman1 wrote:
Housing prices for non-speculators only matter for people changing houses.
For most people, rapidly rising home prices are a curse, because this is what will happen:
a) Housing prices go up. On paper, you just made lots of money
2) County notices, raises your real-estate taxes
3) County is flush with money, and of course, initiates new spending.
4) Bottom drops out of market. Prices plummet.
5) Taxes stay the same for most people, even though the actual value of the house has gone down.
6) Meanwhile the county claims they have a deficit now (new spending, less real-estate taxes).
7) So they raise your real-estate taxes again.
Real estate is something to be lived in. If you're lucky, in 30 years, you'll turn a profit, but even then, it's after you retire.
If you look at it as more than that, you're setting yourself up for financial failure. Just like, a lot of people today.
We've seen this same cycle every 5 years. It's nothing new."
The BH almost have a mental block that prevents them from seeing the reality.
Certainly home ownership is not for everyone. You have to be there for a while; it's good if you're a Harry/Harriet Home fixer (I am); you have to pick a place within your means and pick really well.
If you're the type who leases a Mercedes or Porsche every 3 or does the Enterprise-car thing, as opposed to buying a used Corolla and keeping it for 8 years, then renting makes sense.
Lance, they are telling us that they aren't losing money on their Enterprise Rental, will buy an off-lease Porsche because car prices are plunging nationwide.
Meanwhile, I'm putting new tires on my old Corolla.
As you say, salaries are going up. Most of my neighbors earn enough in 2 months to buy a new Corolla.
Living close to the office, they work an extra hour or two, if needed. The BH from the boonies leave early every day. The boss has noticed that and extra work is reflected in raises, promotions and bonuses.
KH, you are like the Old Faithful of real estate pumpers. Time and time again, right on schedule, you spew the same stupidity.
ReplyDeleteHow on earth is waiting for the inevitable price declines the same thing as renting a car? Do you honestly not have the ability to see what is wrong with your stupid example?
Renting a car is more expensive than buying a car, by a wide margin. How the heck does that compare to people who are being careful with their money by waiting for the bubble to finish popping instead of rushing out to buy something overpriced right away?
"Meanwhile, I'm putting new tires on my old Corolla.
As you say, salaries are going up. Most of my neighbors earn enough in 2 months to buy a new Corolla."
Lol, good for you! New tires are important. That is probably the first smart thing you have said since starting to post on this blog!
As for your neighbors? Who cares? What kind of stupid measure of wealth is that? Econo-cars per month?
Your particular type of bad advice is not new. There is a phrase for it...
"Penny wise but pound foolish."
Skimping on an 8 year old Corolla saves you how much money? Not a lot, a new one would only cost ~$15k. (not that I am advocating wasting money on cars)
Meanwhile... how much does overpaying on a house cost? Much much much more...
If lance had had the intelligence to wait until today he could have bought a house twice as large as his current one for virtually the same price... on the same street.
Finally..
"Living close to the office, they work an extra hour or two, if needed. The BH from the boonies leave early every day. The boss has noticed that and extra work is reflected in raises, promotions and bonuses."
WTF? "Bubbleheads" live in the "boonies" now? Where did you get that stupid idea? I can walk to work without it even being much of a workout.
But hey, in the real estate fantasy world everything is better for an "owner" right?
Harder working, more productive, more promotions, etc etc, and all because they didn't stop and think before buying. Buy now! BUY BUY BUY!!!!
How is it that "bubbleheads" live in the boonies?
ReplyDeleteMore than likely those are homeowners who sadly accepted the "buy now or be priced out forever" line of RE bull.
Renters are the ones who live "close-in," and probably closer in and closer to a Metro than you, kh.
BTW, I am the anon with the house uptown.
"How is it that "bubbleheads" live in the boonies? "
ReplyDeleteYou missed the rural pride thread on Greater Northern VA Housing Bubble Fallout.
They went on and on about Manassas as a cultural and employment center.
"More than likely those are homeowners who sadly accepted the 'buy now or be priced out forever' line of RE bull. "
'buy now or be priced out forever' is a BH's mantra not a HH's, the way they say it is, "I am priced out now but with a little luck, I might not be in the near future."
HH's don't care about that. The HH concern is that their taxes will increase as prices continue to rise.
"You missed the rural pride thread on Greater Northern VA Housing Bubble Fallout.
ReplyDelete"They went on and on about Manassas as a cultural and employment center."
That thread was about a military family who lives in the Manasas area because that is where the job is. How long are you going to continue your pathetic lies? As someone else said, you are truly a sad little man.