Home prices post a record decline in Case-Shiller survey

By Les Christie, CNNMoney.com staff writer

The home price plunge stayed on a record pace this summer, according to a widely watched gauge of national real estate markets released Tuesday.

The S&P Case-Shiller Home Price national index recorded a 16.6% decline in the third quarter compared with the same period a year ago. That eclipsed the previous record of 15.1% set during the second quarter.

Prices in Case-Shiller's separate index of 10 major cities fell a record 18.6%, while its 20-city index dropped a record 17.4%

With foreclosures soaring at record rates, the economic picture dimming and job losses ramping up, all the elements were in place to push prices lower.

"The turmoil in the financial markets is placing further downward pressure on a housing market already weakened by its own fundamentals." says David Blitzer, Standard & Poor's spokesman for the indexes, in a press release. "All three aggregate indices and 13 of the 20 metro areas are reporting new record rates of decline. . . . Prices are back to where they were in early 2004."

The 10-city index is now 23.4% off its peak price, which came in June 2006; the 20-city index is down 21.8% from its July 2006 high and the national index has fallen 21% since the third quarter of 2006.

Home prices in the 10-city index have fallen for 26 consecutive months. The decline has broadened over the past 12 months, with prices dropping in every city of the 20-city index during September.

In the weakest market, Phoenix, the 12-month loss came to 31.9%. Las Vegas prices plummeted 31.3% and San Francisco recorded a 29.5% decline. The best performing markets, Dallas and Charlotte, N.C., still posted drops - 2.7% in Dallas and 3.5% in Charlotte.

With San Francisco and Las Vegas, the other members of the 10-city index are: Miami, down 28.4% year-over-year; Los Angeles, down 27.6%; San Diego, down 26.3%; Washington, down 17%; Chicago, down 10.1%; New York, down 7.3%; Boston, down 5.7%; and Denver, down 5.4%.

In addition to Phoenix, Dallas, Charlotte and the cities in the 10-city index, the 20-city index is made up of: Detroit, down 18.6%); Tampa, Fla., down 18.5%; Minneapolis, down 14%; Seattle, down 9.8%; Atlanta, down 9.5%; Portland, Ore., down 8.6%; and Cleveland, down 6.4%.

Foreclosures continue to take a heavy toll, with sales in some cities dominated by properties repossessed by banks and then put back on the market, often at bargain prices. In Las Vegas and Cleveland, for example, about half of all homes for sale are bank-owned properties, according to the real estate Web site, Trulia.com.

"Foreclosures are clearly a part of the market now," said Blitzer.

He added that the national index price trends tend to be more moderate because they encompass many more exurban and rural areas, where, in many cases, home prices never skyrocketed as they did in some of the hotter, urban markets.

Karl Case, the Wellesley economics professor who is the Case in Case-Shiller, said during a news conference about the latest index report that he would hesitate to put a number on how much further prices could fall, but the increasing job losses will surely worsen the situation.

"There's no cushion against unemployment," he said.

Oil prices fall with global stock markets

Oil slipped below $54 a barrel Wednesday as stock markets across the globe fell and yet another U.S. government report showed how badly the housing market has been hit.

Governments, businesses and consumers cut back on energy use when the economy slows and crude prices reflected those perceptions.

Light, sweet crude for January delivery traded down 66 cents at $54.10 a barrel on the New York Mercantile Exchange after falling to a 52-week low of $53.66.

Consumer prices plunged by the largest amount in the past 61 years in October as gasoline pump prices dropped by a record amount.

The Labor Department said Wednesday that consumer prices fell by 1 percent last month, the biggest one-month decline on records that go back to February 1947. The drop was twice as large as the 0.5 percent decline analysts expected.

Construction of new homes and apartments fell by 4.5 percent in October to an annual rate of 791,000 units, the Commerce Department reported. It was the slowest construction pace on records going back to 1959.

Supply disruptions that once roiled markets have not slowed crude's decline.

"Even reports of renewed rebel activity in Nigeria are not enough to spur a rally," Addison Armstrong, director of market research at Tradition Energy, said in a morning note.

Chevron Corp. invoked "force majeure" Tuesday on 90,000 barrels a day of its Nigeria gross production after a pipeline was breached by militants in the Niger Delta.

Oil prices have fallen 63 percent since reaching a record $147.27 a barrel in mid-July.

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Median home prices fall around US in Q3

WASHINGTON – Home prices fell in a record four out of five U.S. cities in the third quarter as low-cost foreclosures flooded the market and the U.S. housing market's decline spread throughout the country.

Among 152 metropolitan areas included in the trade group's survey, 120 posted declines in median home sales prices compared with a year ago, the National Association of Realtors said Tuesday. Nationally, sales fell by almost 8 percent in the third quarter compared with the same period a year ago.

Sales of foreclosures and other distressed properties made up around 40 percent of transactions in the quarter, bringing down the median price by 9 percent from a year ago to $200,500.

Sales fell in all but four states in the Realtors' group's report. The exceptions were Nevada, California, Arizona and Virginia, where buyers have been able to snap up foreclosed homes at a bargain.

"A very large proportion of distressed home sales are taking place at discounted prices compared to more normal conditions a year ago," Charles McMillan, the Realtors group's president, said in a statement.

That's especially true in places like Sacramento and Riverside, Calif., where prices were down 37 percent and 39 percent, respectively, from last year. The two California cities had the largest annual price declines in the report.

A nasty brew of strict lending standards, falling home values and a tough economy is filtering through the housing market. By the end of the year, foreclosure listing service RealtyTrac Inc. expects more than a million bank-owned properties to have piled up on the market, representing around a third of all properties for sale in the U.S.

Meanwhile many economists believe the economy has fallen into a recession that could be the worst downturn in more than two decades. As layoffs accelerate, that's likely to put further downward pressure on housing prices.

Freddie Mac said last week that rising unemployment rates, tightening credit and deteriorating economic conditions "contributed to a substantial increase in the number of delinquent loans," including loans made to borrowers with strong credit.

Freddie Mac has 28,000 foreclosed properties on its books, while its sister company, Fannie Mae owns 67,500.

On Tuesday, Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, said "it is essential" to use some of the funds in the government's $700 billion financial rescue program to stem the tide of foreclosures.

By ALAN ZIBEL, AP Real Estate Writer

Retail sales fall by record amount in October

Retail sales plunged by the largest amount on record in October as the financial crisis and the slumping economy caused consumers to sharply cut back on their spending.

The Commerce Department said Friday that retail sales fell by 2.8 percent last month, surpassing the old mark of a 2.65 percent drop in November 2001 in the wake of the terrorist attacks that year.

The decline in sales was led by a huge drop in auto purchases, but sales of all types of products from furniture to clothing fell as consumers retrenched.

The 2.8 percent drop marked the fourth consecutive monthly decline in retail sales and was much bigger than the 2 percent fall economists expected.

The weakness was led by a 5.5 percent plunge in auto sales, the biggest drop since August 2005. Auto companies reported unit sales fell to the lowest level in 17 years as potential buyers, frightened by all the turmoil on Wall Street, stayed away from auto showrooms.

Excluding autos, retail sales fell by 2.2 percent, also a record decline, underscoring the widespread weakness last month.

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Housing Market Predictions

I just finished reading an interesting article in Yahoo news about the predictions of real estate for 2009.

Some of the key points that I noticed included:

• Home prices are down 20% nationwide since their peak in July 2006, according to the S&P/Case-Shiller home price index. Economist Nouriel Roubini of New York University, who accurately predicted the housing slide and credit crisis, expects another 20% decline in home prices next year. Patrick Newport of economic forecasting firm Global Insight projects a 15% drop.
• In 2010, real estate should be stronger, with fewer homes clogging the market.
• If you're looking to buy, Barry Miller, a buyer's agent in Denver, suggests you make your first offer as much as 13% below the seller's asking price. "You might not get the house for that, but it's a good starting point," he says.

If you wish to learn more, click on the link below. Many of us are already in a tough time, but this tough time looks to get worst before it gets better.

2009 Predictions