Tuesday, January 29, 2008

Home price drop hits a new record low

The S&P Case/Shiller report shows the biggest year-over-year price decline on record.

By Les Christie, CNNMoney.com staff writer
January 29 2008: 10:19 AM EST

NEW YORK (CNNMoney.com) -- The housing market is only getting worse, according to the latest report from S&P Case/Shiller released Tuesday.

Home prices were down 8.4 percent in November compared with last year in its 10-city index, a record low. The 20-city index also fell 7.7 percent.

The Case/Shiller report compares same-home sale prices. The industry considers it to be one of the most accurate snapshots of housing prices. Previously, the largest year-over-year decline on record was 6.3 percent in April 1991. The November report marked the 11th consecutive month of negative returns for the index, and twenty-four months of decelerating returns.

Cities in trouble

"We reached another grim milestone in the housing market in November," said Robert Shiller, Chief Economist at MacroMarkets LLC and co-creator the index in a statement. "Not only did the 10-city composite index post another record low in its annual growth rate, but 13 of the 20 metro areas, each with data back to 1991, did the same." The worst hit market of the 20 metro areas covered was Miami, where the median home fell a whopping 15.1 percent in value. San Diego prices also fell steeply, down 13.4 percent. Las Vegas was off 13.2 percent and Detroit by 13 percent. Three cities did emerge with higher prices compared with 12 months ago: Prices rose 2.9 percent in Charlotte, N.C., 1.8 percent in Seattle and 1.3 percent in Portland, Ore. But even these markets have turned down over the last three months. Indeed, every city in the index recorded at least three consecutive months of falling prices through November.

The three biggest U.S. cities also recorded year-over-year declines; New York was down 4.8 percent, Los Angeles 11.9 percent and Chicago 3.9 percent. The losses in Los Angeles accelerated in November; that city recorded the largest month-over-month drop of any index city, 3.6 percent.

Tuesday's report came in the wake of many other surveys indicating that the housing market is getting worse. Foreclosure filings and the risks of future foreclosures were both up sharply; the number of new homes sold plunged more steeply than any year on record; and the pace of existing home sales fell to their lowest level in 27 years.



I am writing this from Victoria. Why is it not happening here? It is happening in UK, Europe especially Spain. I have spent many holidays in Spain - it is much nicer than Victoria and better climate. Florida is much warmer. New York is more fun than Vancouver etc. etc. I would really love to know. Why is BC (or Canada rather) almost untouchable?


Alpha_Bear said...

BC is not untouchable. When the Greater Depression is finally apparent in BC, it will be felt harder and last longer than most other places.

jesse said...

"Why is BC (or Canada rather) almost untouchable?"

Because of hubris.

Barney said...

Do we know when the stats for Vancouver / GVRD are coming out? It seems like ages since the last benchmarks, but maybe I am just getting impatient.


I was just told by my agent in Victoria that the market is red hot and people are only accepting cash offers so basically we are out of the loop because we need a larger house but have to sell our existing home.

You cannot find a decent sized family home here for under $900,000 even in Langford.

If property was going to come down it would have by now.

I have really enjoyed your blog. Many thanks to you all.

Drachen said...

Oh man hadenough, you are going to kick yourself in a year from now. Buying right at the very tail end of the bubble.

Your agent is lying by the way. There was a possibility my family would be moving to victoria so I was keeping an eye on things. It's been cooling significantly lately and many houses are going for under asking.

patriotz said...

I was just told by my agent in Victoria

"Your" agent you say? And how is this person being compensated?

Because if he gets a commission on the sales price, he isn't your agent, pal.

Alpha_Bear said...


1. Sell your house today

2. Rent a larger house while you wait for the market to collapse

3. Buy the house of your dreams (in a few years) for 30 cents on the dollar

jesse said...

"You cannot find a decent sized family home here for under $900,000 even in Langford."

I don't know what you classify as "decent"! $900K is a lot of money. I hope the people getting bridge loans to finance the "cash-only" deals can sell their existing places in a reasonable time.

If it helps, think about how much of the employment in Victoria is government related, how much provincial tax revenues could decrease in '08 due to sagging US demand, and how the provincial government will not go into defecit. I know from experience the pressure is unbearable. Try taking up a hobby to distract yourself for a couple of years! And stop going onto MLS cold turkey.

freako said...

Don't forget that the latest Case-Shiller is from November. Extrapolating the size adjusted medians, the price drops likely accelerated in December, making calendar 2007 one crummy year.


alpha bear,

I wish we could rent. We have 4 kids, dog and 3 cats. I wonder who would rent to us. I don't even need a dream house just an extra 1,000 sq. ft.

You would think in this city that $900,000 would get you a nice 4 bedroom house, living room. family room a couple of bathrooms and a good sized backyard for a bunch of kids. A boring suburban type house. Well the ones we saw needed so much work and anything bigger than what we have but well built is just unaffordable. The jump is huge. We have even looked at Bear Lake, Elk Lake etc.

The reason we moved here is that we thought it would be a nice affordable place to bring up kids.

We have pretty much decided to leave.

Alpha_Bear said...


How about this place?

It's got 4 or 5 bedrooms, and dogs and cats are welcome. It's just past Elk lake, and there's
an Elementary School
fairly close.

By the look of the rise on the stairs, it's an old house, but I'm sure that you could easily make it your home for a few years.

Perhaps if you were a bit more optimistic, you might find what you're looking for?

Good luck in your search.

Sam said...

I wish we could rent. We have 4 kids, dog and 3 cats. I wonder who would rent to us.

Plenty of people would rent to you. I am a landlord and I rent to pet owners. My whole life growing up, we had pets and rented. Why "wonder" who would rent to you and instead actually read the listings and call the agencies? There are millions of people in Canada with cats and dogs who rent.

And as far as thinking nobody will rent to you because you have kids?!?!! Humans have kids, and landlords realize that. We're not an alien species that will only rent to single professionals.