Record Decline In U.S. Home Prices, Foreclosure Filings Up

The already troubled housing market is just getting worse says the latest report from S&P Case/Shiller. The 10-City Composite’s annual decline of 8.4% is a new record low for the index, which started recording home prices in 1987.

“We reached another grim milestone in the housing market in November,” says Robert J. Shiller, Chief Economist at MacroMarkets LLC.

Miami was the hardest hit of all the cities—home prices fell a sickening 15.1% in the month of November. San Diego, Las Vegas and Detroit were also hard hit.

Major metro areas have also started to feel the pain. New York was down 4.8%, Chicago 3.9%, and Los Angeles 11.9%.

Foreclosure filings were up 75% in 2007, and prices of existing homes dropped for the first time on record.

Record Declines in Home Prices Continue in November According to the S&P/Case-Shiller(R) Home Price Indices (Press Release) [CNNMoney]
Homes see first annual price drop on record [CNNMoney]
Foreclosures up 75% in 2007 [CNNMoney]
(Photo:ClatieK)

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  1. laserjobs says:

    No wonder foreclosure filings are up. Who wouldn’t walk away from an underwater home if they put nothing into it in the first place? The way it goes these days, you can take a hit on your credit and you will still get credit card offers right away and be able to buy another home again in a couple of years. What is the risk of letting the bank have the keys and now making it their problem? There is even a company called “You Walk Away” that helps underwater homeowners get out. The amount of greed that stripped out the qualifications just came home to roost.

  2. thetango says:

    Everytime I read one of these “record drop in house price” articles I keep wondering how my local area has been effected. Does anyone know of a good site to checkout a regional %-age drop?

  3. diamondmaster1 says:

    Next time–and every time–the new property tax bills come out, I intend to dispute the vale assigned to the house in light of the downward pressure on home values/prices. Why pay taxes based on a value that you cannot achieve when selling the property?

  4. laserjobs says:

    @thetango: Don’t bother with Zillow as it is totally screwed right now. It is like it has been hacked to show higher prices in the last couple weeks. Your best bet is to do a search on recently sold properties including bank owned and auction sales. Strip out the bank foreclosure sales as they buy at the loan amount at the foreclosure auction and are not a relaible indicator of real prices.

  5. thesweethog says:

    Our assessed (for tax purposes) value actually went down this year. Not by much, but I was still surprised.

  6. Gorky says:

    Record low housing prices. Sounds like a good time to buy!!!

  7. Gorky says:

    As a side benefit of lower housing prices, youll have to pay less in property taxes since they are based on the appraised value of your home.

  8. savdavid says:

    Thanks Bush for that great economy you are leaving America with!

  9. meanwalrus18 says:

    you can get your house reappraised to pay lower property taxes

  10. sleze69 says:

    @savdavid: Clearly Bush was to blame for all the unscrupulous lenders and mortgage agents.

    /sarcasm off

  11. AcidReign says:

        Doesn’t seem to hurting the local neighborhood. Developers buy it for twice what it’s worth, tear the house down, build a 6000 square-foot particle-board monstrosity, and sell it for five times as much.

        Our next door neighbor (for the last five years) sold his house for double what he paid for it, last November, and it’s sat vacant, since. Come spring, I’m figuring we’ll have to get used to bulldozer, jackhammer, and nailgun noise for the next year or two. Not to mention construction worker litter up and down the street. Yippie…

  12. laserjobs says:

    @AcidReign: I agree you will hvae to get used to bulldozer when the next bailout plan includes provisions for tearing down vacant houses.

  13. warf0x0r says:

    I blame California. 520k for a 1200 sq. ft. condo.

    But I think 600 bucks should fix that.

  14. spiderman1369 says:

    @warf0x0r: A condo that cheap…where I want to buy it. I know people who paid over a million for a condo. A freakin Condo!!!

    As for people losing their houses since they got in over their head…Stupidity Should Hurt!!!

    I don’t care what kind of creative financing lenders came up with. If you couldn’t afford a $600,000+ house on $12/hour before the real estate boom, you couldn’t afford it during it.

  15. balthisar says:

    Decreased values don’t always lower your taxable value. Here in Michigan, Proposal A back about 13 years ago changed that. It’s tied to inflation. So, your assessment goes down, but your taxes still go up. What’s the advantage? You can be driven out of your home by hyper home markets. Why the hell should your taxes increase just because the six lots around you have turned into McMansions?

    The downside — if you can call it that — is that your taxes still increase even if the value drops. It’s really no big deal to those of us who have prime mortgages, because we’d’ve seen that increase anyway. We’re financially responsible, and we, you know, plan for tax increases.

    Now when you sell, the taxable value jumps up to the current assessed level (50% of FMV) right away for the new owner. What I’m not sure of is what happens if the assessed level is lower during the sale. If my house drops enough, I might just “sell” it to my wife for a $1.

  16. spiderman1369 says:

    You also have to love the outrageous HOA fees and my favorite Mello-Roos!!! What a freakin scam!!!

  17. Nick says:

    @laserjobs: I don’t know, I noticed a jump in Zillow prices too, but the new estimates seem to be in line with recent sales in my neighborhood.

  18. doctor_cos wants you to remain calm says:

    @sleze69: Right, Bush is not to blame for anything bad, isn’t that so?
    Keep telling yourself that, genius. 1/20/09 – the end of an Error.

  19. randombob says:

    @doctor_cos:

    “The End of an Error.” I like that. Has a nice ring to it.

  20. SuperJdynamite says:

    @meanwalrus18: “you can get your house reappraised to pay lower property taxes”

    Maybe. I tried that immediately after closing. The appraiser’s estimation was $20k below the tax authority’s recorded value and the purchase price was $11k below that.

    I filled out a request to the tax authority to lower the recorded value, attached my recent appraisal, and they promptly rejected it.

  21. Sherryness says:

    It’s the Beanie Baby crash all over again. The only reason those prices were so inflated was because people were collecting/selling – to EACH OTHER. It had to crash at some point. Thus with the flippers – and so it goes, and so it goes…..

  22. Sherryness says:

    Only this time, it’s with houses.

  23. jkaufman101 says:

    So what in the hell happened to the government/ private sector borrower-bailout agreement? Did it happen, and why aren’t there stories about its impact on foreclosures?

  24. spinachdip says:

    @doctor_cos: There’s little Presidents can do about economic cycles. We were due for a downturn whatever the policies. Now, you could make the argument that the current administration’s inability/unwillingness to come up with any policy besides cutting interest rates and taxes contributed to the degree of doodoo we’re in – that would be a fairer assessment.

    The state of economy has less to do with Bush than the Randians who run the markets and the growing disparity in wealth. That’s been going on since the 1980s.

    Paul Krugman has what he promises would be an ongoing analysis on why the Bush economy is awful, and FWIW, he does not blame Bush (not directly, anyway): [krugman.blogs.nytimes.com]

  25. ARP says:

    @doctor_cos: I don’t think Bush is DIRECTLY to blame for the current housing market. I think he was more of an enabler than the cause. Here is my support for this statement as I don’t like blanket statements from either left or right without some evidence.

    1) Failed to regulate mortgagate/banking industry when he was aware that these higher risk loans were being made. However, after 9/11, the housing market was one of the small bright spots and so he allowed it to grow out of control as a way to prop up other failing areas.

    2) Heavily marketed the idea of home ownership. Many of his speeched trumped home ownership numbers as a sign of a strong economy. Of course, for some of us, home ownership just isn’t a good idea.

    3) Cut rates like crazy. This provided a temporary boost. It also created inflationary pressures. Redefined what inflation is to make it seem low. The problem is that people buy gas and food so inflation is real to them even if its not officially high. So even though rates are low, people are spending a lot more of everyday items. Once he could no longer contain inflation, he had to raise rates. The problem is with all of his wars and tough talking, geopolitical forces forced costs even higher. So while inflation was less of a problem, his wars caused prices to continue to rise. Add in an ARM, and you can see where it goes.

    4) In response to all crises, he said to spend money, go shopping, etc. Seriously, this was his response to the war and what we could do to help. Not conserve- consume more. Well, we spent money. Problem was, it was money we didn’t have.

    5) Maintain low wages (primarily through keeping miniumum wage stagnant).

    6) Primary beneficiary of tax cuts were wealthy. They don’t generally spend like the rest of us. But since he told us to spend, we did.

  26. Yes, Las Vegas was hit…I currently would be able to sell my house for only 2/3 of what I paid for it…fortunately I can afford to hold onto it for a few more years until the market makes some sort of rebound…no foreclosure for me…

  27. Imaginary_Friend says:

    @SuperJdynamite: Don’t give up after the first try. It’s like with rebates: persistence (and meticulous documentation) wins.

  28. doctor_cos wants you to remain calm says:

    @spinachdip: @ARP: Thank you, that’s what I’m talking about.
    Just because people don’t like how I say what I say (sometimes), doesn’t mean it’s not true :)

    Too bad it’s harder to get a loan now, because houses are cheap!

  29. doctor_cos wants you to remain calm says:

    And thanks to the sheeple of FLA, falling for the hype about ‘Issue 1′ yesterday. Now all our well-to-do neighbors who don’t need the additional tax cuts will get them, while working-stiffs buying their first homes get to make up the difference.

    Folks, if you’re going to vote on these ‘Amendments,’ take the time to learn what they will and will not do from more sources than some talking head on television (or in Tallahassee) or the signs in your neighbor’s yard.

    Although people do get the government they deserve. Is it too late to move to another planet?

  30. hills says:

    I am so tired of this negative housing market news! Housing prices are slowly RISING where I live (Norfolk, VA), and I am trying to sell my house – all this media hype is making that difficult – Now is also a great time to buy with very low interest % on 30 year mortgages.

    It’s not doom and gloom everywhere!

  31. Me - now with more humidity says:

    DOCTOR_COS: Not all of us fell for it. We’ll get hit by it, but I sure as hell didn’t vote for it.

  32. thedanza says:

    The numbers quoted in the post by the Consumerist are a little misleading. Prices didn’t drop 15.1% in Miami in November alone. Those are YOY (year over year) numbers, so between Nov 2006 and Nov 2007, prices dropped 15.1% for Miami. Having said that, it’s still really bad.

    The reason you haven’t heard about foreclosures being affected by the “bailout,” if that’s what you want to call it, is because less than 25% of homes in trouble even qualify for the fast-track refinancing, while others must go through a more intensive process. The GSE increases to maximum loan amounts will be able to refinance possibly $200-300 billion more loans, while the lower rates will help to offset some of the rate shocks to mortgage payments as they have finally moved lower than most ARM rate caps.

  33. selectman says:

    @Crumbles: I love how ignorant partisan hacks are.

    @hillsrovey: I get really tired of interested parties (read: real estate agents, home sellers) blaming their hardships on “media hype”. Please. How is it media hype to report cold hard facts which happen to reflect price drops and lower production?

  34. DoctorMD says:

    Whats with the category, this is great news. A “good market” is when you can buy something cheaply. Not when your real estate agent, gov’t, and seller are ripping you off because there are so many morons out there. Lets hope next year beats this record then I may consider buying.

  35. bigduke says:

    Anecdotal for sure, I had an ex try to talk me into buying a condo in Vegas 2 years ago. The asking price was $180k. I passed. Last year she called me an idiot because price had dropped to $165k and I would not bite. She called me a week ago and told me that the condo was still empty and now on the market for $110k. I told her to call me when it gets to $80k

  36. bigduke says:

    @doctormd: This is only true for first time buyers and investors with cash in their banks that can snap up a decent “investment”. Everyone that owns a house has to sell their existing house in the bad market before they can buy that next great deal.

  37. trujunglist says:

    Yay, go San Diego! Finally, maybe people will come to their senses and realize that they can’t charge 3 million for a 3 bedroom house in a crappy area.