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US home prices tumble in April at record rate

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GoldenRod
10 years on LIF!

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Shawn

US home prices tumble in April at record rate

Jun 24, 4:36 PM (ET)

By J.W. ELPHINSTONE

NEW YORK (AP) - No matter who's measuring, the results are the same: Housing prices are tumbling at the sharpest rates ever with a bottom still at least a year away, economists say.

Both the Standard & Poor's/Case-Shiller home price indices and the Office of Federal Housing Enterprise Oversight index on Tuesday reported record year-over-year declines in April, a sobering signal that the housing slump not only is deepening, but also engulfing markets once above water.

The last holdout in the Case-Shiller index, Charlotte, N.C., finally succumbed to the national housing downturn, with prices slipping 0.1 percent from a year ago. No city in the Case-Shiller 20-city index appreciated in April, the first time that's happened since its inception in 2000.

"I think that's the most disturbing part of the report," said Mark Zandi, chief economist for Moody's Economy.com. "It shows the declines are now across all markets, that this is a nationwide housing collapse rather than one in a few markets."

The 20-city index dropped by 15.3 percent in April versus last year, while the narrower 10-city index plunged 16.3 percent, its biggest decline in its 21-year history.

The OFHEO index showed prices falling 4.6 percent in April from the same month last year, when the index peaked. That was the biggest decline since record-keeping started in January 1991.

The government index is calculated using mortgage loans of $417,000 or less.

While the government report has shown nationwide price declines, the Case-Shiller index has shown far greater drops because it focuses on larger cities where prices rose further during the boom years, and includes riskier loans.

Zandi forecasts prices to drop another 10 percent through this time next year before hitting bottom, while Patrick Newport, an economist at Global Insight, expects the Case-Shiller index to fall another 20 percent to 30 percent. Prices should halt their descent sometime next year, he said.

"The numbers are going to get worse because inventory levels continue to be at record highs or near record highs," Newport said.

Much of the pricing pressure comes from foreclosures and so-called short sales, in which a lender accepts an offer less than the value of the mortgage. These distressed sales can be discounted by 20 percent to 50 percent, forcing home sellers to slash their listing prices to compete.

About one in four homes sales are distressed sales, Zandi estimated, with that number rising sharply in the once red-hot housing market like Las Vegas, Phoenix and Southern California.

While there's been early evidence that these discounted properties are attracting buyers and boosting sales volume, pricing has yet to respond to the increase in demand.

Las Vegas and Miami again posted the largest declines in the Case-Shiller index, each losing nearly 27 percent.

However, the annual declines in Denver, Chicago and Cleveland were less severe than in the previous month, but Maureen Maitland, a S&P vice president, is reluctant to peg that as an indication of stabilization.

"We wouldn't call a trend on one-month data," she said.

The report also showed prices in eight metro areas increased in April from March, but the gains could be seasonal blips as the home-buying spring season starts up rather than a sign of a turnaround, Maitland said.

The housing slump, along with higher food and fuel prices and disruptions in the credit markets, has taken its toll on consumer sentiment.

An industry group Tuesday said U.S. consumer confidence plummeted more sharply than expected in June to it lowest level in more than 16 years. The Conference Board's reading of consumers' expectations hit an all-time low.

Posted 6/24/08 10:06 PM
 
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sunnyplus3
:)

Member since 11/05

8749 total posts

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Re: US home prices tumble in April at record rate

no surprise to me, its a cycle things will turn around.

Posted 6/25/08 6:15 AM
 

Beth
The Key to your new home....

Member since 2/06

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Name:
Beth

Re: US home prices tumble in April at record rate

things will get worse- and they they will turn around

this shouldn't come as a surprise

I was watching Fliping Out last night- and even his appraisal got cut $400K or 25% on a $1.6M house in CA

no market is immune now

Posted 6/25/08 9:28 AM
 

cindy104
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Member since 6/08

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Cindy

Re: US home prices tumble in April at record rate

I've definitely seen a huge drop. Apparently the market will keep dropping until 2010, but then it'll be on it way back up again....yes that ongoing cycle! Chat Icon

Posted 6/25/08 9:28 AM
 

Beth
The Key to your new home....

Member since 2/06

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Beth

Re: US home prices tumble in April at record rate

Posted by cindy104

I've definitely seen a huge drop. Apparently the market will keep dropping until 2010, but then it'll be on it way back up again....yes that ongoing cycle! Chat Icon



that's my husbands prediction as well

he has been right about everything so far

and is in the business- and gets alot of info the public doesn't see

Posted 6/25/08 9:30 AM
 

kspags
LIF Adult

Member since 6/08

1228 total posts

Name:
Kelly

Re: US home prices tumble in April at record rate

The problem now is that the interest rates are rising again. The house we lost a month ago would have had the same mortgage as a house we are looking at now, which is $50,000 less. It's crazy!! But my dad said considering that years ago it was at 13% at one point, the 6's isn't terrible.

Posted 6/25/08 9:49 AM
 

cindy104
This is my "Baby"

Member since 6/08

1522 total posts

Name:
Cindy

Re: US home prices tumble in April at record rate

Posted by Beth1210

Posted by cindy104

I've definitely seen a huge drop. Apparently the market will keep dropping until 2010, but then it'll be on it way back up again....yes that ongoing cycle! Chat Icon



that's my husbands prediction as well

he has been right about everything so far

and is in the business- and gets alot of info the public doesn't see



Oh yes, it makes it much easier when you're in the business! Chat Icon

Posted 6/25/08 9:49 AM
 

cindy104
This is my "Baby"

Member since 6/08

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Name:
Cindy

Re: US home prices tumble in April at record rate

Posted by kspags

The problem now is that the interest rates are rising again. The house we lost a month ago would have had the same mortgage as a house we are looking at now, which is $50,000 less. It's crazy!! But my dad said considering that years ago it was at 13% at one point, the 6's isn't terrible.



Very true, but interest rates will be coming down soon again....b/c houses are not selling and it will budge

Posted 6/25/08 9:51 AM
 

Beth
The Key to your new home....

Member since 2/06

24849 total posts

Name:
Beth

Re: US home prices tumble in April at record rate

Posted by kspags

The problem now is that the interest rates are rising again. The house we lost a month ago would have had the same mortgage as a house we are looking at now, which is $50,000 less. It's crazy!! But my dad said considering that years ago it was at 13% at one point, the 6's isn't terrible.



the dropped again last week

on friday when the stock market lost 200pts

also- it's always better to pay less for a house with a higher rate then pay more with a lower rate

you can always re-fi you can never change what you paid for the house

but in the 6% range is not very high and still very low

Posted 6/25/08 9:52 AM
 

Melmel821
Love being a mom!

Member since 5/08

2776 total posts

Name:
Melanie

Re: US home prices tumble in April at record rate

Wow, they expect it to bottom out in only one year? I've heard 2-4 years. It really shouldn't be a surprise with how quickly it rose. But it's a cycle and will go up and down over time.

Posted 6/25/08 10:00 AM
 

MegZee
My bunny

Member since 5/06

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Name:
Meaghan

Re: US home prices tumble in April at record rate

Posted by Melmel821

Wow, they expect it to bottom out in only one year? I've heard 2-4 years. It really shouldn't be a surprise with how quickly it rose. But it's a cycle and will go up and down over time.



prices have been decreasing in certain parts of the country since 2006. I bought my house on LI 12/06 and paid about $75K less than original asking.

I think if interest rates stay in the 6% range, prices will pick up next year. If interest rates go up, thats a different story!

Posted 6/25/08 10:13 AM
 

kspags
LIF Adult

Member since 6/08

1228 total posts

Name:
Kelly

Re: US home prices tumble in April at record rate

Posted by Beth1210

Posted by kspags

The problem now is that the interest rates are rising again. The house we lost a month ago would have had the same mortgage as a house we are looking at now, which is $50,000 less. It's crazy!! But my dad said considering that years ago it was at 13% at one point, the 6's isn't terrible.



the dropped again last week

on friday when the stock market lost 200pts

also- it's always better to pay less for a house with a higher rate then pay more with a lower rate

you can always re-fi you can never change what you paid for the house

but in the 6% range is not very high and still very low



I never thought of it that way!! So, your DH does think they will drop again?

Message edited 6/25/2008 10:16:56 AM.

Posted 6/25/08 10:16 AM
 

cindy104
This is my "Baby"

Member since 6/08

1522 total posts

Name:
Cindy

Re: US home prices tumble in April at record rate

When 10 yr T-bill is on the rise, interest rates usually come down.


Refi is always an option, but then you'll be paying closing costs again too.
Chat Icon

Posted 6/25/08 10:19 AM
 

sunnyplus3
:)

Member since 11/05

8749 total posts

Name:

Re: US home prices tumble in April at record rate

Posted by Beth1210

Posted by kspags

The problem now is that the interest rates are rising again. The house we lost a month ago would have had the same mortgage as a house we are looking at now, which is $50,000 less. It's crazy!! But my dad said considering that years ago it was at 13% at one point, the 6's isn't terrible.



the dropped again last week

on friday when the stock market lost 200pts

also- it's always better to pay less for a house with a higher rate then pay more with a lower rate

you can always re-fi you can never change what you paid for the house

but in the 6% range is not very high and still very low



I agree with the price of the house being constant, but recently homeowners have been lured in by the temptation of frequent re-fi's. When you add up all of the costs associated with it, its sometimes not worth it.
Not to mention all of the people that re-fi their higher rate conforming loans into teaser rate ARMs & are now losing homes they had practically paid off before they refi'd.
The ideal scenario is to buy a home with a price AND an interest rate you can afford long term.

Posted 6/25/08 10:22 AM
 

cindy104
This is my "Baby"

Member since 6/08

1522 total posts

Name:
Cindy

Re: US home prices tumble in April at record rate

Posted by KellyFG

Posted by Beth1210

Posted by kspags

The problem now is that the interest rates are rising again. The house we lost a month ago would have had the same mortgage as a house we are looking at now, which is $50,000 less. It's crazy!! But my dad said considering that years ago it was at 13% at one point, the 6's isn't terrible.



the dropped again last week

on friday when the stock market lost 200pts

also- it's always better to pay less for a house with a higher rate then pay more with a lower rate

you can always re-fi you can never change what you paid for the house

but in the 6% range is not very high and still very low



I agree with the price of the house being constant, but recently homeowners have been lured in by the temptation of frequent re-fi's. When you add up all of the costs associated with it, its sometimes not worth it.
Not to mention all of the people that re-fi their higher rate conforming loans into teaser rate ARMs & are now losing homes they had practically paid off before they refi'd.
The ideal scenario is to buy a home with a price AND an interest rate you can afford long term.



Agreed!

Posted 6/25/08 10:24 AM
 

Beth
The Key to your new home....

Member since 2/06

24849 total posts

Name:
Beth

Re: US home prices tumble in April at record rate

QUOTE]

I agree with the price of the house being constant, but recently homeowners have been lured in by the temptation of frequent re-fi's. When you add up all of the costs associated with it, its sometimes not worth it.
Not to mention all of the people that re-fi their higher rate conforming loans into teaser rate ARMs & are now losing homes they had practically paid off before they refi'd.
The ideal scenario is to buy a home with a price AND an interest rate you can afford long term.


of course that is the best option

and I am not talking about people that take there equity out to go on vacation or pay off consumer debt- that's another issue

I am talking about if rates climb to 9%+ and the prices drop even further making it still a great time to buy a house and then you can re-fi to a lower fixed rate mortgage when rates come back down

Posted 6/25/08 11:22 AM
 

Erica
LIF Adult

Member since 5/05

11767 total posts

Name:

Re: US home prices tumble in April at record rate

from what I have read the bottom should be Q3 09 - Q1 10 when all the bad loans wash themselves out of the market.

I am hoping for that. While last year was a hit for my neighborhood (although the houses that sold were originals - no updates), I see increases from 2005.

Posted 6/25/08 12:03 PM
 
 

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