Home Prices Drop Over Past 12 Months
Kurt Brouwer October 30th, 2007
Update: Please feel free to take a look at this post. Here are more recent posts on real estate and the Case Schiller real estate index:
Case-Shiller Index — Chart of the Day
Los Angeles Real Estate Bubble vs. National Bubble — Chart of the Day
Home Prices Still Falling — Chart of the Day
We previously reported on slumping prices for homes in Major Turning Point?–Robert Shiller and Housing Prices Fall 3.2% Now, there is an interesting post from Justin Fox at Time’s Curious Capitalist Blog. He put together a report on the current status of home prices in major metropolitan areas. The report is based on the findings of the Case - Shiller Index [emphasis added]:
‘The headline number in the S&P/Case-Shiller Home Price Indices released this morning was that U.S. home prices dropped 4.4% in the 12 months ending in August. But it’s in the metropolitan-area details that the Case-Shiller data gets really interesting. So with the help of Time.com graphics whiz Feilding Cage, I charted them:…’
Click to enlarge chart
Justin Fox goes on to discuss the varying results for different metropolitan and there is no discernible pattern here as far as I can tell:
‘…There are the bursting-bubble metros, which on the chart start with L.A. and end with New York. Within that group there are some pretty interesting differences: L.A. and Miami peaked higher and later than the rest; Phoenix was just moseying along well outside the bubble zone until mid-2004, after which prices almost doubled in just two years; San Francisco and New York saw steadier (and possibly less bubblicious) gains than the rest…’
What I take away from this chart and the report is that home prices are falling around the country with some exceptions. The coastal regions seem to have had the biggest price appreciation and, as a result, the biggest declines. The exception to the coastal price drop is the Pacific Northwest (Seattle and Portland).
The other exception seems to be what I might call the heartland, which includes cities such as Chicago, Minneapolis, Cleveland, Detroit as well as Atlanta, Charlotte and Denver. These cities seem to have missed out on the big increases, but they have also largely avoided the big drops too.
Because of the long and largely uninterrupted climb in real estate prices, I think complacency set in and the concept of risk faded away. Now, we are seeing the market in action as real estate buyers are waiting out the decline and those who have to sell are being forced to do so at whatever price the market will bear.
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