Housing prices post record declines--Las Vegas, Miami and Phoenix all saw prices plummet by at least 20%. And so far, there is no sign of a bottom.
Home prices have posted another record decline, as most of the nation's largest markets suffered double-digit drops over last year, a survey released Tuesday shows.
The S&P Case/Shiller Home Price Index, which tracks 20 of the largest housing markets, showed prices plummeting by 12.7% in the 12 months ending February. That's the biggest fall since the index began tracking prices in 2000.
The 10-city Case/Shiller index is down 13.6% year-over-year, the biggest drop since its launch in 1987.
"There is no sign of a bottom in the numbers," S&P spokesman David M. Blitzer, said in a prepared statement. "Prices of single family homes continue to drop across the nation."
"This is huge," said Dean Baker, co-director of the Center for Economic and Policy Research. "Back a couple of years ago, people were saying, 'Housing prices are not like stocks; they change slowly,'" he said.
But the drop in home prices appears to be accelerating. Indeed, Baker said that at the rate prices are falling, as much as $6 trillion in home values could be wiped out from the top of the market in June, 2006, through the end of this year.
Prices in the Las Vegas metro area have plunged more than any other city, down 22.8% over the 12 months through February. Miami prices plummeted 21.7%. In Phoenix, they've fallen 20.8%.
The declines create a vicious cycle, according to Peter Schiff, the president of the investment firm Euro Pacific Capital. He was sounding alarms about the housing bubble more than two years ago.
As housing price losses extend, he said, the fall-off in demand for homes will deepen. And Schiff expects to see a national price decline of 30% - and by as much as 50% in the worst hit markets.
U.S. Foreclosure Filings Double in First Quarter, Led by Nevada
April 29 (Bloomberg) -- U.S. foreclosure filings more than doubled in the first quarter as payments rose for subprime adjustable mortgages and falling home prices left property owners unable to sell or refinance without losing money.
Almost 650,000 properties were in some stage of foreclosure during the quarter, or 1 in every 194 U.S. households, Irvine, California-based RealtyTrac Inc., a seller of foreclosure data, said today in a statement. The number was 112 percent above a year ago. Nevada, California and Arizona had the highest rates.
Home prices in 20 U.S. metropolitan areas fell 10.7 percent in January from a year earlier, the most on record, declining for the 13th straight month, according to the S&P/Case-Shiller home- price index. A record 18.6 million homes stood empty in the first quarter, the U.S. Census Bureau said yesterday.
Government attempts to slow the flood of defaults "could be simply deferring another flood of foreclosures," Saccacio said in the statement. "That could extend the length of time it takes the market to recover from this downward cycle."
Nevada led the nation with the highest foreclosure rate in the first three months of the year. Filings rose 137 percent to 19,595 from the year-earlier period. One in every 54 households there was in default or foreclosure, said RealtyTrac, which counts default notices, auction notices and bank repossessions and has a database of more than 1 million properties.
Home prices sink at record clip; foreclosures keep mounting
Jody Hanson and her boyfriend Scott Harrison want to buy a two-story house with at least three bedrooms in Las Vegas for no more than $225,000. So far they have been out-bid on four foreclosed homes.
"There are just a ton of people here getting foreclosed upon," Hanson said, "so there are just so many deals waiting for you."
Half of all sales in Las Vegas are foreclosures, said Karen Wilson, a local Century 21 agent, though she said the glut of homes on the market has started to wane and transactions have picked up.
Nevada posted the country's worst foreclosure rate in the first quarter, RealtyTrac Inc. said Tuesday, with one in every 54 households receiving a foreclosure-related notice.
"Once the market starts in a given direction, the momentum will carry it down, even below the (historic) trend line, until something happens to change the overall psychology," said Jim Gaines, a research economist at Real Estate Center at Texas A&M University.
Bottom Line: We aren't anywhere near the bottom yet. I've already seen (very nice) bank-owned foreclosure selling for ~ 60% of their Peak prices (a 40% haircut) and with increasingly tight credit markets, waves of future mortgage resets (can you say EXPLODING ARMS), declining tourism/gaming revenues and a weakening job market, foreclosures will continue to increase while prices continue to decline... Banks can't continue to hold these increasingly massive inventories and will have to resort to fireside sales... I honestly expect to see 1999-2000 prices again ($65 a SF) -- within 24-36 months.
BTW: Here are a couple links to some of my other articles related to Nevada Housing:
- Las Vegas -- A House of Cards Bound to fall
- The Las Vegas Economic Downturn Has Started
- Las Vegas Housing Bubble Update
All the best,