Home prices continue to drop
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Kai Ryssdal: We’ll have some more on the crash test year that Detroit’s had coming up in just a couple of minutes. First, though, a detour into another economic pothole. The latest housing stats are out. As expected, they’re dismal. The S&P Case-Shiller housing index dropped 18 percent in October from a year ago. That’s the biggest fall since since it was created almost nine years ago. It puts home prices where they were in 2004. Marketplace’s Sarah Gardner has more.
Sarah Gardner: October was a chilling month in the U.S. housing market. All of the cities in the Case-Shiller index saw home prices sink. That includes Boston, Chicago, Tampa and Seattle, among others. The worst declines were in the West — home values in Phoenix, Las Vegas, and San Francisco plunged more than 30 percent. David Blitzer is chairman of S&P’s index committee. He says the numbers were no surprise, but October was particularly nasty.
David Blitzer: This was the time when the credit crunch, or the mortgage crisis, whatever term you want, really landed on the entire economy and all of us like a ton of bricks.
Tim Ghriskey, chief investment officer at Solaris Asset Management, says also keep in mind this particular index is limited to 20 metropolitan areas. And many of them are in states like Florida and California, with overbuilt housing markets and high foreclosure rates.
Tim Ghriskey: They were the markets where there was a lot of speculation by contractors and by other real estate speculators. Individuals owning multiple homes believing that home prices would go up forever.
Still, Ghriskey says, they’re sobering numbers. This is the 27th month in a row that this housing index has recorded losses. If there is a silver lining, Ghriskey says, it’s that the country’s inventory of unsold homes is now shrinking. He expects home prices to stabilize by the end of 2009, if not sooner.
I’m Sarah Gardner for Marketplace.
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