Home Prices Fell 19.1 Percent in First Quarter to 2002 Levels

May 26, 2009 - 2:42 PM
National home prices are at levels not seen since the 2002 Winter Olympics, but a closer look at a housing index released Tuesday shows real estate is indeed local with some prices in certain cities falling to pre-2000 values.

In this photo taken Friday, April 24, 2009, contract worker Glen Anderson gets ready to hang a for sale sign for the Howard Hanna realty company outside a home in Chagrin Falls, Ohio. (AP Photo/Amy Sancetta)

New York (AP) - National home prices are at levels not seen since the 2002 Winter Olympics, but a closer look at a housing index released Tuesday shows real estate is indeed local with some prices in certain cities falling to pre-2000 values.
 
The Standard & Poor's/Case-Shiller National Home Price index reported home prices tumbled by 19.1 percent in the first quarter, the most in its 21-year history. Home prices have fallen 32.2 percent since peaking in the second quarter of 2006.
 
But in cities across the country home prices varied dramatically, depending on affordability, foreclosure activity and the local economy. The bottom may be in sight in some markets, but nationally home values are expected to decline - though at a slower pace - for the rest of the year.
 
"By our estimation, the composite 20-city index is perhaps two-thirds of the way through its ultimate total decline in this cycle," according to Joshua Shapiro, chief U.S. economist for MFR Inc.
 
It's hard to believe it could get much worse for homeowners in Detroit. Homes there are worth what they sold for in 1995. And while that's good news for homebuyers, the implosion of the auto industry and economic fallout means fewer buyers have the money to qualify for a mortgage.
 
"I feel like houses here are free," said Detroit area real estate agent Rose Marie Jouan with Re/Max Showcase Homes. Her house that she sold in 2004 for $200,000 is on the sales block, bank-owned, for $86,000.
 
In Phoenix and Las Vegas, where prices have plunged by half since their peaks, home values have receded to levels not seen since the beginning of the real estate boom. Phoenix prices are at early 2001 levels and Las Vegas values hover at mid-2002 prices.
 
Home values in Charlotte, N.C., Portland, Ore., and Seattle are steady at 2005 prices, the best showing of all 20 cities in the Case-Shiller report. All three were some of the last to fall into the housing slump.
 
The Case-Shiller report offered other hopeful signs the worst may be over for some cities. Denver prices posted an increase over February, while Dallas prices were flat.
 
Also, the rates of annual decline for the 10- and 20-city indexes slowed in March, the second straight month they didn't set record price drops. The 20-city index fell by 18.7 percent from the year before and the 10-city index lost 18.6 percent.
 
Still, there are no signs home prices nationally have hit bottom.
 
"We see no evidence that a recovery in home prices has begun," said David M. Blitzer, chairman of the S&P index committee.
 
All 20 cities showed monthly and annual price declines, with nine setting annual records. Fifteen cities posted double-digit drops and Phoenix, Las Vegas and San Francisco recorded declines of more than 30 percent.
 
Minneapolis posted a 6.1 percent decline from February to March, the biggest monthly drop on record for any metros in the indexes. Ron Peltier, chairman and chief executive of HomeServices of America, attributed the drop to a jump in distressed sales in March.
 
Economists will get a look at April housing data Wednesday when the National Association of Realtors releases sales data for previously owned homes, and on Thursday when the Commerce Department puts out numbers for sales of newly built homes. Economists surveyed by Thomson Reuters expect existing home sales to rise 2 percent from March to April, while new home sales are forecast to rise by 1.1 percent.