http://biz.yahoo.com/cnnm/080513/051208_q12008_home_prices.html
Home prices continue sharp descent
Tuesday May 13, 11:55 am ET
By Les Christie, CNNMoney.com staff writer
Single-family home prices dropped 7.7% in the first quarter in the
largest year-over-year decline since the National Association of
Realtors began re****ting prices in 1982.
The median sales price fell to $196,300, down 4.8% compared with the
last three months of 2007.
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Lawrence Yun, the chief economist of NAR, attributed much of the
record decline to liquidity problems dragging down high-priced
markets.
"These are highly unusual results because there were very few jumbo
loan originations in the latest quarter," he said. "So sales are much
slower in high-cost areas."
Jumbo mortgages skew results
That sales slowdown changed the mix of houses sold.
In California, according to Yun, homes bought with jumbo mortgages -
more than $417,000 - accounted for 40% of all sales before liquidity
for these loans dried up during the summer of 2007. Since then only
10% of sales in California involved jumbo loans.
In February, Freddie Mac and Fannie Mae, the government sponsored
enterprises that guarantee a market for conforming loans, have raised
the $417,000 cap to include mortgages of up to $729,750, but lenders
were still charging much higher rates for these "conforming jumbos,"
between 1% and 1.5% more than ordinary conforming loans. The higher
rates are discouraging sales in higher price ranges and so skewed
NAR's median price results.
Many of these same markets were also among the hardest hit by the
subprime implosion, which forced many lower priced homes back on the
markets, again dragging down NAR's results.
That helped put many California and other Sun Belt cities, with their
toxic combinations of both high prices and heavy pro****tions of
subprime mortgages, among the biggest losers.
In California, Sacramento prices plummeted 29.2% to $258,500 compared
with last year and Riverside prices fell 27.7% to $287,100. Prices in
Las Vegas fell 20.2% to $247,600 and those in Phoenix dropped 15.4% to
$222,200.
Some Midwestern cities, hard hit by factory closings, also suffered
huge losses with Lansing, Mich., prices falling 26.9%. Saginaw, Mich.
had the lowest median prices of any of the 150 markets studied. A
median house there sold for just $65,400.
The best performing market in the nation was Binghamton, N.Y., where
prices rose 11.8% to $109,700. Second was Peoria, Ill., up 10.4% to
$119,000 and Spartanburg, S.C., where prices rose 10.2% to $130,300.
In the Northeast, single-family home prices rose slightly, 3.2% to
$280,000. But prices in the South dropped 7.5% to $164,200, in the
Midwest they fell 7.9% to $142,700 and in the West they plunged 12.3%
to $296,300.
Foreclosures put more homes in play
Hurting home prices were big rises in foreclosure rates over the past
12 months, which threaten to get even worse. Delinquencies more than
doubled over that time and more than 155,000 lost their homes in bank
repossessions during the first three months of the year.
All that foreclosure activity added to the glut of homes on the
market. The total inventory has risen to an average of 10 months worth
of unsold homes. In addition, a record number - 2.9 million - of
vacant homes are up for sale, according to the Census Bureau.
The big inventory has led to aggressive price sla****ng and increased
incentives by builders looking to sell homes. They've also cut way
back on housing starts, which are at a 17-year low.
The pace of existing home sales, at about 492,000 a month, is about a
third less than its peak during the summer of 2005.
Condo prices fared a bit better than single-family homes. The median
price fell just 3% since early 2007. The worst hit market was the
Sarasota area, where condos dropped 35% over the past 12 months to
$268,500. Sacramento condo price cratered 33.4% to $147,200. In Miami,
prices fell 26.4% to $176,100.
The best performing condo market was about as far from the madding
crowds of South Beach as one can get: Bismarck, N.D., condo prices
soared 36.4% compared with 12 months ago, to $124,900.
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