Tuesday, November 27, 2007

Home Prices Show Record Decline

In Sept S&P/Case-Shiller Home Price Index fell 4.9% y/o/y, the biggest drop since the data began in 1988 -- but in-line with expectations. It's the 9th straight month of declines. Lower house prices will help to clear out excess inventories (a lot much more than rate cuts).
Here's the money quote from Shiller:
"The declines in the national figure are notable for two reasons. First, the 3rd quarter decline, at 1.7%, was the largest quarterly decline in the index’s 21-year history. And, second, the year-over-year decline posted its second consecutive record low at -4.5%. Consistent with prior 2007 reports, there is no real positive news in today’s data. Most of the metro areas continue to show declining or decelerating returns returns on both an annual and monthly basis.
All 20 metro areas were in decline in September over August. Even the five metro areas that still have positive annual growth rates -- Atlanta, Charlotte, Dallas, Portland and Seattle -- show continued deceleration in returns."
Here's the metro overview:
S&P/Case-Shiller Index Release - September 2007 Index

A FED rate cut won't help this slow process of adjusting prices to economic reality. Banks continue to tighten guidelines and the major mortgage insurance companies AIG, GE are pulling out of providing lenders protection from default on anyone with less than a 620 FICO. Mortgage rates and especially jumbo mortgage rates for prime borrowers are at the best levels in years. These items and the belief by the public at large that prices were irrational will pressure the real estate market for severals years. As an example of the moves that have occured so far. This is from our friends at Sacramento Area Flippers in Trouble

8112 Sacramento StFair Oaks, CA 95628
Total Loss: $390,000
Percent Loss: 33.1%
Asking Price: $789,000Bedrooms:4 Baths: 3 Sq. feet:3501
Listing History:Down 36.9% from $1,250,000 On 2006-04-09Down 34.2% from $1,199,000 On 2006-06-16Down 33.1% from $1,179,000 On 2006-07-15Down 28.2% from $1,099,000 On 2006-09-16Down 33.1% from $1,179,000 On 2006-09-30Down 49.1% from $1,549,000 On 2007-07-14Down 34.2% from $1,200,000 On 2007-08-18Down 1.3% from $799,000 On 2007-10-20Days on market: 594# of Times Listed: 6

11836 Delavan CirRancho Cordova, CA 95742
Total Loss: $323,500
Percent Loss: 32.3%
Asking Price: $679,000Bedrooms:6 Baths: 4 Sq. feet:5600
Listing History:Down 38.3% from $1,100,000 On 2006-09-16Days on market: 434# of Times Listed: 3

6030 Eagles Nest RdSacramento, CA 95830
Total Loss: $300,000
Percent Loss: 33.3%
Asking Price: $600,000Bedrooms:3 Baths: 3 Sq. feet:3039
Listing History:Down 33.3% from $899,000 On 2006-05-25Days on market: 569# of Times Listed: 3

6415 Valenda CtElk Grove, CA 95757
Total Loss: $294,500
Percent Loss: 42.5%
Asking Price: $399,000Bedrooms:5 Baths: 3 Sq. feet:2954
Listing History:Down 27.5% from $550,000 On 2007-06-16Days on market: 161# of Times Listed: 2

11999 Mandolin WayRancho Cordova, CA 95742
Total Loss: $288,000
Percent Loss: 43.2%
Asking Price: $379,000Bedrooms:3 Baths: 3 Sq. feet:2885
Listing History:Down 20.2% from $475,000 On 2007-08-04Down 17.4% from $459,000 On 2007-09-08Down 11.7% from $429,000 On 2007-09-29Days on market: 112# of Times Listed: 3
If a peak at Sacramento, CA wasn't enough look over at Phoenix Flippers in Trouble. When will the bleeding stop? 08, 2011? Make a comment while it's still FREE of charge.

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