Home prices sank by the sharpest annual rate on record in January, and the pace continues to accelerate, but there were a handful battered metro areas where price declines slowed, according to data released Tuesday.
"It's not good news," said Lou Galuppo, a professor with the University of San Diego Burnham-Moores Center for Real Estate.
The Standard & Poor's/Case-Shiller index of home prices in 20 major cities tumbled by a record 19 percent from January 2008. It was the largest decline since the index started in 2000. The 10-city index dropped 19.4 percent, also a new record.
In San Diego, home prices are down 24.9% since their peak in 2006, according to our media partner voiceofsandiego.org.
Galuppo believes we'll see home prices continue to go down and says the drop in home prices will only continue the real estate spiral we've been seeing.
"When people know that their house today is less than their mortgage on it they will pay their credit cards, car payments, other things
and they will let their house go," Galuppo said.
San Diego real estate expert Robert Griswold also believes there’s more room for home prices to go down in San Diego and says people just don’t have the income to jump into the market.
However, real estate experts including Galuppo, say this index does not take into account one very important thing: The number of home sales in San Diego is on the rise. And they say that's a good sign of recovery, however far it may be down the road.
"The reality is prices are falling, more people coming into the market, more sales activity, and that shows us that there is some light at the end of the tunnel," Galuppo said.
All 20 cities in the S & P report showed monthly and annual price declines, with 13 posting new annual records. Prices dropped by more than 10 percent in 14 cities. Faring better were Dallas, Denver and Cleveland, with annual price declines of around 5 percent.
"There are very few bright spots that one can see in the data," David Blitzer, chairman of S&P's index committee, said in a prepared statement. "Most of the nation appears to remain on a downward path."
Phoenix was described as “gruesome” by Blitzer in a New York Times article Tuesday, citing a drop of 48.5 percent from its June 2006 peak.
Las Vegas, Miami, San Francisco and San Diego are not far behind since all have fallen more than 40 percent, Blitzer said.
As Kelly Bennett reports, prices in the highest tier (homes sold for more than $424,184) slipped 2.8 percent between December and January.
That beat the 1.2 percent decline for the middle tier (homes from $288,350 to $424,184) and the 2.6 percent decline for the lowest tier (homes under $288,350), Bennett reports.
Last week, the National Association of Realtors said sales of previously occupied homes unexpectedly jumped in February by the largest amount in nearly six years as first-time buyers took advantage of deep discounts on foreclosures and other distressed properties. Some economists say that could help moderate declines.
"We still think there is a good chance the rate of (price) decline will slow through the spring as existing home sales stabilize and perhaps pick up a bit, but foreclosures are weighing heavily on prices," wrote Ian Shepherdson, chief U.S. economist at High Frequency Economics.
Prices in the 20-city index have plummeted 29 percent from their peak in summer 2006, while the 10-city index has fallen 30 percent. Prices have sunk back to levels not seen since late 2003, and analysts say the ultimate drop in prices could easily be 35 percent or greater in some metros.
To provide some relief, Congress in February passed a new $8,000 tax credit for first-time homebuyers and President Barack Obama is directing $75 billion to a new foreclosure prevention plan. But the success of those efforts could well depend on how far the U.S. economy falls.
Some slivers of hope about the economy buoyed consumers in March and consumer confidence crept upward for the first time in four months, the Conference Board said Tuesday.
Stuart Miller blamed weak consumer confidence and competition from deeply discounted foreclosed properties for a 28 percent decline in new home orders in its most recent fiscal quarter.
But Miller told Wall Street analysts Tuesday there's been a discernible uptick in sales this month, though believes it's too early to say it's a defining trend.