Median Home Prices Drop In Many Cities

WASHINGTON — Median home prices fell in two-thirds of the cities surveyed during the first three months of this year while sales declined in 46 states compared to a year ago, according to the latest report highlighting the depth of the nation's housing woes.

The National Association of Realtors said Tuesday that median prices for existing single-family homes dropped in 100 of 149 metropolitan areas in the January-March period, while 48 metropolitan areas saw price increases and one reported no change.

The 67 percent of cities reporting price declines was the largest percentage of cities reporting price drops in the history of the survey, which goes back to 1979. In the fourth quarter, prices had fallen in 36 percent of the cities surveyed.

Nationally, the median home price _ the point where half the homes sold for more and half for less _ fell to $196,300 in the first quarter, down by 7.7 percent from the same period a year ago.

The biggest percentage price decline by metro area was a 29.2 percent drop in the Sacramento, Calif., metro area.

Sales of existing homes were down in 46 states for the first three months of this year, compared to the same period a year ago. The largest percentage plunge was a 38.6 percent drop in Maryland during the first three months of this year compared with the same period in 2007. Only Alaska, Indiana and New Jersey reported sales increases during the survey period. Data for New Hampshire was not available.

Nationally, sales fell by 22.2 percent in the first quarter compared with the same period a year ago.

The steep declines in prices and sales were the latest indication of the problems facing the housing market, which is in a prolonged slump that has contributed to pushing the country to the edge of a recession.

Analysts blamed much of the problem in the first quarter on soaring mortgage foreclosures which are dumping more homes on an already glutted market and the credit squeeze, which has made it hard to obtain so-called jumbo loans to purchase higher-priced properties.

"These are highly unusual results because there were very few jumbo loan originations in the latest quarter, so sales are much slower in high-cost areas, and at the same time foreclosures related to subprime mortgages rose," said Lawrence Yun, chief economist for the Realtors.

While subprime loans, which were made to borrowers with weak credit histories, account for 10 percent of all homeowners, they make up more than half of all foreclosures, Yun said. "Sharp price declines are principally in neighborhoods where subprime lending has been widely prevalent," he said.

Many analysts believe that prices will continue to fall for the rest of this year until the inventory of unsold homes gets worked down to a more manageable level.

"The bottom line is that construction spending and house prices seem likely to continue to decline well into 2009," Janet Yellen, president of the Federal Reserve Bank of San Francisco, said in a speech Tuesday.

Of the 48 metropolitan areas reporting price increases, the largest percentage price gain occurred in the Binghamton, N.Y., area where the median price rose by 11.8 percent from a year ago to $109,700. Peoria, Ill., was next with a 10.4 percent price increase followed by Spartanburg, S.C., with a 10.1 percent increase.

By region of the country, prices were up 3.2 percent in the Northeast from a year ago but down in all other regions of the country. The region with the biggest price drop was the West, down 12.3 percent, followed by declines of 7.9 percent in the Midwest and 7.5 percent in the South.

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AP Economics Writer Jeannine Aversa contributed to this report.

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On the Net:

National Association of Realtors: http://www.realtor.org

Comments

[MissingAmerica]

Investors are taking advantage of homeowners who need to sell for various reasons. Bush then, as is his style, penned another disaster by offering a $7,000 bonus to those who either buy newly built homes or foreclosures. This leaves the average person in the cold. My children have to move because the cost of commuting is too much, and if they want out, they will lose anywhere from $50,000 to $75,000 on the deal. My son commented that he had always been told that a home was a good investment. I told him it was until George Bush decided to sink everything this country has into Iraq. The kids work hard and now they're taking a bath. Good thing, because the trailer they're living in now only has a shower!

Thank you, George, for once again injecting yourself into our homes.

When will Congress impeach this destructive fool?

[ImmanuelGoldstein]

I'm sorry. For thirty years a raft of 3 piece suited liars have spun the myth that home ownership is a conveyor belt to wealth and prosperity. There are tax advantages. But overall homes cannot appreciate faster than median income increases for very long before a crash occurs, simple arithmetic shows this. The value of a house naturally tends to actually depreciate through wear and weather unless you are putting money into it. And of course you have to pay for taxes.
Real investment is ownership of something which generates cash through value added. A mine that turns rock into ore, a factory that turns ore into steel or steel into airplanes.
A home once built doesnt produce any real value added. It doesnt keep off the rain or protect your property any better tomorrow than today, in fact it tends to do so less well. Only random events can boost the value of a house, but they can't happen to everyone all at once.

You bought into a big lie, namely that housing can appreciate faster than incomes forever. A lot of people with fancy degrees believed it too so don't so don't feel too bad for getting duped.

[JoeBlough]

This is great news. Finally, people of modest means, who live within their means will be able to one day buy a home.
Housing prices are not really falling. They are simply returning to their proper value. Houseing prices double, but the value doesn't. All these MacMansions were over priced and the suckers lined up to buy them. Now prices are returning to true value. That is, unless the government gets involved and screws everything up again.

[MajorKong]

True, but when we're all unemployed by the resulting recession, we won't be able to afford them even at the cheaper prices.

[BillKen]

Are we better off now than we were eight years ago? Not even close! What would you rather do,
drink a beer with him or give him a pretzel and hope he chokes? Semper Fi

[KillTheMessenger]

A bubble is a bubble. Everyone saw the burst of the housing bubble coming, it's here, now live with it. Stop the whining. What really happened was that a generation of people lived above their means, had all their investment in their homes and virtually nothing else, needed to cash out badly before the bubble burst to put the onus on those who bought at the peak and now nobody is happy but the people who got out before the thing went to shambles. And even they aren't because their dollars are circling the drain.

Similar things could be said about the overinflated suburbs which offer only one thing: square footage galore in copycat homes without any perceivable quality of life. Sure some developers got rich. There is no denying that. But few of the people who bought into these "sleeping beauties in a land far, far away" are happy with their four hour commutes and killer gasoline bills. Maybe renewing inner cities and building for density would have been smarter, after all? But then, nobody has accused Americans of being smart on average. At least not lately.

[USBrit]

Dear God, you sound like me. Americans: frequently smart a$$ed, ill tempered, dangerous, inclined towards a Disney Land artificial view of the world, paranoid and dangerous, but definitely not terribly smart. And let us not leave out their faith based economics, the insanity that endless tax cuts will always revive an economy, that trickle down economics actually works and that Milton Friedman and his ill begotten offspring, Alan Greenspam, are not in some form deeply responsible for the bubble economy this country has enjoyed for the last 15 to 20 years. But in one small point you are not correct, everyone did not see this collapse coming. Those paying attention did, unfortunately the majority did not. But that then relates nicely back to the question of average intelligence.

[RabidRightRebel]

Anyone that suggests this will be over before prices are down by 25% is still living in cloud cockoo land.

[thegreatgiginthesky]

I agree, the prices still need to come down a ton. Think of all the people who got into overpriced homes and are now watch the builder build the same home for thousands less.

[JoeBlough]

Unfortunately, these dimwits are the same ones that vote against their economic interests by voting Republican.

You get what you deserve, people. Pay attention next time.

[Kurt]

And still my realtor friends are trying to get me to buy a house and they swear to high heaven that prices have bottomed out. (They are offended when I tell them I think I'll wait, and remind them that I remember 1996 when the Congress changed the laws governing losses on commercial property and everyone stopped building commercial property in this area for ten years. At which point they change the subject.)

Additionally, as an amusing side story, before the bubble happened, one of my friends wanted to buy a house with a straight 30 year mortgage and 20% down, he relates that both the realtors and the banks tried every argument they could think of to get him to sign something different, anything. Eventually, they graciously decided to give him the mortgage he asked for, but it was a battle.

I have no sympathy for mortgage industry and a lot for the buyers who had never bought a house before. As for those who had previously purchased homes, they should have known better. So I say save the first time buyers and let the rest sink, including the whole mortgage industry.

It's a pretty poor country which has to depend on building houses to keep its economy going. I wonder what happens when all the Boomers die and the population shrinks. Will we see the "mother of all great depressions" then?

I hope the Fed is planning for this.