Home Price Index in U.S. Fell Record 10.7% in January, Shiller Survey Says

[Purveyor]

Source: Bloomberg News

March 25 (Bloomberg) -- Home prices in 20 U.S. metropolitan areas fell in January by the most on record, a sign the housing recession is deepening, a private survey showed today.

The S&P/Case-Shiller home-price index dropped 10.7 percent from January 2007, after a 9 percent decrease in December. The gauge has fallen for 13 consecutive months.

Price declines will continue as foreclosures add to a glut of unsold properties, and stricter lending rules make it harder to get financing. Declining values leave homeowners feeling less wealthy and with less home equity to borrow against, undermining consumer spending and pushing the economy closer to a recession.

``It's not good for the short term, the dynamics of investment and consumption in the U.S. economy, but eventually affordability will improve,'' Roger Kubarych, chief U.S. economist at Unicredit Global Research in New York, said in an interview with Bloomberg Television. ``This extends the period in which housing is weak.''

The home price index was forecast to decline 10.5 percent, according to the median estimate of 18 economists surveyed by Bloomberg News. Projections ranged from declines of 9.5 percent to 11 percent.



Read more: http://www.bloomberg.com/apps/news?pid=20601103&sid=a4kZQNXUFpW4&refer=us

[Omaha Steve]

1. US Home Prices Drop 11.4 Pct in January

Source: Associated Press

NEW YORK (AP) — A widely watched index of U.S. home prices fell 11.4 percent in January, its steepest drop since data for the indicator was first collected in 1987.

The decline reported Tuesday in the Standard & Poor's/Case-Shiller index means prices have been growing more slowly or dropping for 19 consecutive months.

The index tracks the prices of single-family homes in 10 major metropolitan areas in the U.S.

The broader 20-city composite index also fell, dropping 10.7 percent in January from a year ago. That makes it the first time both indexes dropped by double-digit percentages.


Read more: http://money.excite.com/jsp/nw/nwdt_rt_top.jsp?news_id=ap-d8vkgktg0&

[selador]

2. unfortunately

NOT YET IN SEATTLE

augh!

it's gonna be ugly when it happens, especially cause stupid sell side analysts (real estate agents) keep claiming "it won't happen here. seattle is different"

reminds me of the tech stock bubble (and EVERY other bubble in history). substitute "it's different this time (P/E's don't matter, etc.) with "it's different HERE"

y'know. same idiots. different day

[Zynx]

3. Sometimes people forget that price matters more than the "fundamentals"

In stocks, earnings growth can be good, but the stock can still be stupidly overpriced. With homes, income, population, and job growth can be good and supplies tight and homes can be drastically overpriced. In commodities, demand can be good and supplies tight and they can still be overpriced. Bubbles are nasty that way.

[selador]

5. yes

the other major difference between stock bubbles and real estate bubbles is that stocks are WAY WAY WAY WAY more liquid than real estate.

there is ALWAYS (well, unless markets are halted) a bid to hit when you NEED to sell), and execution takes milliseconds, in stocks.

supply is much more slow to rear its ugly head in real estate due to the fact that there is no ONE price for A house, and sellers fool themselves into thinking they can sell later for more money (this got a lot of people in trouble in tech stocks and ENE when they wouldn't take a SMALL loss and respcet their stop orders, and instead held on, doubled and tripled down and prayed). the situation is uglier in real estate in many ways.

people think their houses HAVE to appreciate in value. the market OWES them AT LEAST a breakeven trade. so, they will delude themselves and finally when and if they have to make a sale, it will be in full capitulation mode in a full buyers market. i spoke to a lady the other day who just REFUSES to take an offer for her house that is less than what she paid for it. I HAVE TO AT LEAST BREAK EVEN (note: significanly higher costs in real estate vs. stock transactions. i can sell a futures contract for $1.53. i can sell 500 shares of stock for under $3. commissions are not an issue. nor are carrying costs or property taxes)

this is especially true with massively overleveraged homeowners who are below water in their equity.

you are right. price is just an OPINION. the house is "worth" (in the short run) ONLY what you can get for it

and markets can remain irrational longer than overleveraged speculators can remain solvent

[Zynx]

7. Exactly. Real estate is a vicious beast due to the fact the market is so much

more illiquid. It takes a lot longer for excesses to be squeezed out of real estate.

[Eurobabe]

4. Wow, great time to think about buying with Euros

:woohoo:

Steve, I love your siggie line. :rofl:

[MannyGoldstein]

6. In 1970, A House Cost ONE Median Year's Salary

Today it's more like FOUR years' salary. This has been a tremendous handicap for the the young adults who are not wealthy.

By that measure, prices could drop by substantially more than 50% by the time this is over. This correction in prices is needed - but it's going to cause huge problems nonetheless.

[cprompt]

8. and then the realtors

first time i met with one, they said you should spend 3-4 times your annual salary on a house. i live in one of the fastest growing counties in the country, has been for years and it amazes me how many for sale signs are now in the yards of mcmansions and how many foreclosures are happening in this area.

[Earth_First]

9. 3x-4x your salary?

Was your realtor intoxicated at the time?
Under the influence of narcotics?

[cprompt]

13. no..

i have heard that from a few as a commonly held belief. i listened to my economics professor in college though, when covering personal finance, your mortgage (insurance and taxes included) should never exceed 40% of your net income.

[slackmaster]

10. Mine would cost almost 7 times my gross salary

I couldn't afford it if I didn't already own it.

[edhopper]

11. I do not know

a single family that could afford to buy their home at todays prices. Tells me prices still have a long way to fall.

[enid602]

12. 15

Mine would be 15X my salry.