Home prices fell 8.9% in 2007, the largest decline in the Case-Shiller home price index in at least 20 years, Standard & Poor’s reported Tuesday.
For the fourth straight month, nominal prices in all 20 Case-Shiller cities were lower than in the previous month.
The 20-city index fell 2.1% in December and 9.1% for the year. The original 10-city index fell 2.3% in December and 9.8% for the year.
Phoenix had the largest decline in December, falling 3.5%, followed by San Diego at 3.4% and San Francisco at 3.2%
The Case-Shiller index, which tracks multiple sales of the same homes, is considered by many observers to be the best gauge of national and metropolitan-area real-estate values. Its major flaw is that it may overemphasize the coastal regions that had the biggest bubbles.
We have been tracking the month-to-month declines in the 20-city since August 2006, and the monthly declines have been accelerating:
You will note that price declines moderated slightly in the summer months, and that may well be the case again this summer. The National Association of Realtors has reported in the past that median prices tend to decline more in the winter when demand is slower. The year-over-year trend [also for the 20-city] is showing a nearly linear decline however:
I thought the following was worth noting:
People have a tendency to think in terms of annual rate of change, and may not always consider the magnitude of a month to month change. For that reason, I have posted a chart of the 20-city index with the November-December 2007 change below, along with the annualized rate:
Note: These are NOT my predictions [or Shiller's for as far as I know] for 2008 price drops. This is merely to demonstrate how severe price drops in December were.
Also according to Marketwatch:
National home prices were down 10.2% from the peak reached in late 2006. Prices will eventually fall about 20% to 25%, predicts Jan Hatzius, chief economist for Goldman Sachs.
Given current trends, I believe Hatzius predictions to be overly optimistic.
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Phoenix Real Estate prices tied for second largest drop in 2007 according to Case-Shiler Prices down 15.3%. We are tied with Vegas. Only Miami had a bigger drop Ties for second largest decrease. Can you imaging the Republic posting this story. It will never happen so you can read the detail here.
http://www.marketwatch.com/news/story/home-prices-fall-89-2007/story.aspx?guid=2AE7B561-1FE4-4BE8-B202-332A04AECAEC&dist=SecMostEmailed
Definitely optimistic. This on the other hand is a TOTAL CROCK! I wonder what S&P got for this.
http://www.reuters.com/article/marketsNews/idUKN2923061820080229?rpc=44
Here in DC we’re confident predicting a 1/3 reduction in prices from the peak (Spring 2006 here) in the prime areas (next to the Capitol, Dupont Circle, Georgetown), and worse in the marginal areas (up to 60% price drops), bottoming out in the late summer to winter of 2009.
It’s amazing to me that our prediction might actually be overly optimistic. We think there’s risk to the downside only.
I wonder what the Index would be if data was included from all 50 states.