Report: Home Values Closed Out 2008 with Record Declines

Data through December 2008, released on Tuesday by ""Standard & Poor's"":http://www.standardandpoors.com for its ""S&P/Case-Shiller Home Price Indices"":http://www.homeprice.standardandpoors.com (HPI), show that the prices of existing single family homes across the United States continue to set record declines, a trend that prevailed throughout all of 2007 and 2008.
The decline in the S&P/Case-Shiller national HPI - which covers all nine U.S. census divisions - recorded an 18.2 percent decline in the fourth quarter of 2008 compared to the same period in 2007, the largest drop in the series' 21-year history. The 10-city and 20-city composites also set new records, with annual declines of 19.2 percent and 18.5 percent, respectively.
David M. Blitzer, chairman of the index committee at Standard & Poor's, said, that the 2008 numbers illustrate the deepening downturn in the residential real estate market. ""There are very few, if any, pockets of turnaround that one can see in the data,"" Blitzer said.
Blitzer pointed out that all of the 20 metro areas surveyed reported annual declines, and eight of those metros are now sporting negative rates in excess of 20 percent. ""If one looks in detail at the annual return data,"" Blitzer said, ""it can be seen that 13 of the 20 MSA's [metropolitan statistical areas] and the two composites have been reporting consecutive record declines since December 2007. The monthly data follows a similar trend, with all of the metro areas reporting at least four consecutive months of negative returns.""
According to S&P, by the end of December, average home prices across the United States were at similar levels to what they were in the third quarter of 2003. From their peak in the second quarter of 2006, average home prices are down 26.7 percent.
All 20 metro areas studied are reporting negative monthly and annual rates of change in average home prices. Boston, Denver, Los Angeles, San Diego, and Washington D.C. are reporting a relative improvement in year-over-year returns, in terms of lesser rates of decline than last month's values, S&P said. Detroit showed a marginal improvement in monthly returns, but was worse off in its annual rate. Minneapolis, Las Vegas, and Phoenix all reported monthly declines in excess of 4.5 percent in December.
The worst performing cities in terms of year-over-year declines continue to be from the Sunbelt, reporting negative returns in excess of 20 percent. Phoenix was down 34 percent, Las Vegas declined 33 percent, and San Francisco fell 31.2 percent.
Denver (-4 percent), Dallas (-4.3 percent), Cleveland (-6.1 percent), and Boston (-7 percent) faired the best in terms of annual declines.
Looking at the data from peak-thru-December 2008, Dallas is down a relatively mild 8.6 percent from its peak in June 2007, while Phoenix is down 45.5 percent from its peak in June of 2006. According to S&P, the rates of decline from the individual heights of each market are evidence of how much each market has taken back in terms of the gains earned in the past 10-15 years. Eighteen of the 20 metro areas are in double digit declines from their peaks, with half of the MSA's posting declines of greater than 20 percent and four of those (Las Vegas, Miami, Phoenix, and San Francisco) in excess of 40 percent.
These indices are generated and published under agreements between ""Standard & Poor's"":http://www.standardandpoors.com and ""Fiserv, Inc."":http://www.fiserv.com To view the S&P/Case-Shiller HPIs for individual metro areas, as well as historical data series, ""click here"":http://www.homeprice.standardandpoors.com.