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Portfolio > Alternative Investments > Real Estate

Home Prices Drop to Lowest Levels Since Bust

By Associated Press

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WASHINGTON (AP) — Home prices in a majority of major U.S. cities tracked by a private trade group have fallen to their lowest levels since the housing bubble burst.

The Standard & Poor's/Case-Shiller index fell in December from November in all but one of the 20 cities it tracks. The 20-city index declined 1%.

The only market to see a gain was Washington.

Eleven of the markets hit their lowest point since the housing bust, in 2006 and 2007: Atlanta; Charlotte, N.C.; Chicago; Detroit; Las Vegas; Miami; New York; Phoenix; Portland, Ore.; Seattle; and Tampa, Fla.

The damage from the real estate bubble now spreads well beyond the Sun Belt, where new homes cropped up at a frantic pace during the mid-2000s. In many places, prices are expected to keep falling for at least the next six months.

"Unlike the 2006 to 2009 period when all cities saw prices move together, we see some differing stories around the country," said David M. Blitzer, chairman of the Index Committee at Standard & Poor's.

Some of the worst declines are in cities hit hard by foreclosures and high unemployment, including Detroit, Phoenix and Tampa. Many people are holding off buying or selling homes because they fear the market hasn't hit bottom yet.

A large number of homes that aren't selling are contributing to a second wave of price declines since the boom years. Many of them have been vacant for months.

In December, prices fell for the sixth straight month and for the eighth time in the past 11 months. Foreclosures are also expected to increase as the year goes forward.

"There's just way too many homes out there relative to demand and we're not going to see that change anytime soon," said Joshua Shapiro, chief U.S. economist for MFR Inc.

The housing recovery is uneven across the United States, with coastal cities in California and the Northeast faring much better than the Midwest and Southeast. One exception is Dallas, which has avoided some of the big losses seen elsewhere.

The Case-Shiller report measures home price increases and decreases relative to prices in January 2000 and gives an updated three-month average for the metropolitan areas it looks at.

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