July
2008
LA Home prices drop record 24.5%0
Los Angeles home prices have taken a record dive. Basically, LA home owners just lost one fourth of their home’s value. If you have an 80% mortgage one year ago, you are upside down. Wow. It just keeps getting worse.
More from CNN….
May home prices dropped a record 15.8% from a year ago, according to the S&P/Case-Shiller Home Price Index of 20 cities. It was the 22nd consecutive month of decline recorded by the index. Prices fell 0.9% from April to May.
Each of the 20 metro areas covered by the index posted annual declines; nine posted record lows and 10 cities recorded double-digit drops.
The Case-Shiller 10-city Index posted a year over year decline of 16.9%, and a 1% month over month dip. Both the 10-City Composite Index and the 20-City Composite Index are reporting record annual declines.
“Since August 2006, there has not been one month where we have seen overall price increases, as measured by the two Composites,” said David Blitzer, Chairman of the Index Committee at Standard & Poor’s.
Losing streak
Case-Shiller has been tracking the 20-city index for 19 years, while the 10-city index is 21 years old. The current streak of price declines has been unprecedented in both its length and depth. The last extended decline began in in April 1990, when the 10-city index sank for 10 consecutive months. But that total loss was just 6.5%.
Since the 10-city index peaked in July 2006, it has plunged 19.8%. The 20-city is down 18.4% from the peak.
The 20-city index’s Sun Belt cities, which recorded the biggest price gains during the boom, have led the charge down. Las Vegas prices have plummeted 28.4% during the past 12 months; Miami prices fell 28.3%; and Phoenix homes lost 26.5% of their value.
Midwest metro areas, which have endured tough economic times for years, are also feeling the pain. Detroit prices are off 17.4% for the 12 months, and Cleveland is down 8%.
Northeast cities like Boston, down 6.2% for the 12 months, and New York, off 7.9%, have been less volatile than the Sun Belt.
The smallest year-over-year declines were recorded by Charlotte, N.C. (down 0.2%), Dallas (down 3.1%), and Denver (down 4.8%).
The soaring numbers of foreclosures are helping to push down prices. Banks tend to slash prices when selling repossessed homes, since they lose money every month a house sits vacant. They must pay property taxes, maintenance expenses and utility costs while getting nothing back in return.
Those sales, in turn, tend to bring down prices in the rest of a given neighborhood, creating a vicious cycle.
Foreclosures accounted for a large – and growing – share of all existing homes sold in some markets. In California, for example, 40% of the existing homes sold during the three months ended June 30 were foreclosures, according to DataQuick, a real estate information provider. That’s up from just 5.4% during the same period in 2007.