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Foreclosed Homes Push Down S&P Price Index for Cities

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By : John Cutts    99 or more times read
For the 31st consecutive month, the Standard & Poor’s/Case-Shiller home price index for 20 major U.S. cities declined by 18.6 percent in February as real estate foreclosure homes continue to push down home prices, but the decline rate slowed down.

Compared to other yearly index changes, the February home price index drop is not a record decline. The February 2009 index fell by 18.6 percent compared to February 2008 and decreased by 2.2 percent compared to January.

The city price index has not posted a price increase since the index’s peak in July 2006, registering a total of 30.7 percent decrease since the July 2006 peak.

Mike Larson, a real estate analyst at Weiss Research, said the slight decline in the index is not great news. He said it just indicates a slight slowdown in the pace of declines. He asserts that the housing market is still weak, although it has recovered a little.

Meanwhile, David Blitzer, chairperson of Standard & Poor’s index committee, said his group needs more data before they can say if housing prices are finally bottoming out and if the price effects of foreclosed homes are still significant.

Ken Goldstein, a Conference Board economist, said February is the second month in recent months that the decrease has slowed down. He expressed his hopes that home prices are nearing the bottom. He observed that the perceived home price leveling has perked up consumer confidence in April, although still at low levels.

In addition, Bernard Markstein, economist working for the National Association of Home Builders, said a rising number of housing markets are nearing a leveling point for home prices. He cited reports of sales of new homes, existing homes and foreclosed homes. He estimates that the housing market will start its difficult road to recovery by December 2009.

With the Phoenix-Mesa and Scottsdale metro area having 1 in every 40 units in foreclosure in the first quarter, Phoenix topped the 20-city list in decline rates for home prices. Due to the glut of foreclosed homes, prices in Phoenix fell by 35.2 percent over February 2008 and by 4.5 percent compared to January. Compared to Phoenix’s peak, prices dove by a staggering 51 percent.

Las Vegas, which had more foreclosed homes than any other metro area in the first quarter, is second in the list with a decline rate of 31.7 percent over February 2008.

Other big losers in home prices due to their large inventories of foreclosed homes are San Francisco, Miami and Los Angeles.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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