Key home price index shows record decline

[Amerigo Vespucci]

Source: MSNBC

NEW YORK - The collapse in home prices accelerated to a record pace in the fourth quarter of 2007, with prices plunging 8.9 percent last year, according to a national home price index released on Tuesday.

The quarterly drop in prices of existing single-family homes quickened to 5.4 percent in the final three months of last year from a 1.8 percent drop in the third quarter, according to the S&P/Case-Shiller U.S. National Home Price Index, Standard & Poor’s said in a statement.

The 8.9 percent year-over-year decline was the largest in the 20-year history of the index, as housing was pressured lower by a huge supply of homes for sale, rising foreclosures and tighter lending conditions.

By comparison, during the 1990-91 housing recession the annual rate bottomed at a 2.8 percent drop.

Read more: http://www.msnbc.msn.com/id/23350937/

[onehandle]

1. The good news is that we will be shopping for a home soon.

The bad news is that we will be selling ours at the same time.

We're in one of the least affected cities (Atlanta), but it won't be scooped up overnight like we had wished.

[Scurrilous]

2. Study: S. Fla. No. 1 in home prices slide

<snip>

"South Florida home prices lost 17.5 percent in the final quarter of 2007, the worst in the nation, Standard & Poor's said Tuesday.

U.S. home prices lost 8.9 percent in the final quarter of 2007, marking a full year of declining values and the steepest drop in the 20-year history of its housing index."

<snip>

"The Miami market, which includes Broward, Miami-Dade and Palm Beach counties, continues to lead the weakest markets, posting a 17.5 percent annual decline. Las Vegas and Phoenix followed with a 15.3 percent drop each. Los Angeles, San Diego, San Francisco, Detroit and Washington, D.C., all recorded double-digit annual declines."

http://www.miamiherald.com/news/breaking_news/story/433959.html

[whosinpower]

3. question for economists

Could a person say that this downturn is a price correction for inflated home prices due to the subprime mortgage fiasco? That is that home prices went up when borrowing money was insanely easy - and now that this is not the case....home prices are adjusting to what is more realistic?

I'm just asking to try to understand. Forgive my ignorance if this is not correct.