Home Prices -1.5% Down
Home prices fall at fastest rate in 13 years
Home prices depreciated year-over-year for the second straight month, falling at the fastest pace since late 1993. A year ago, prices were rising 14%. In 20 major cities, prices are down 1% in the past year, the biggest decline ever in that series that dates back to 2000. Prices will probably continue falling, said Goldman Sachs economists in a research note. “We expect [the index] to be down about 5% by the end of 2007. If anything, it’s getting there a bit faster than we anticipated,” they wrote.
Prices fell year-over-year in 13 of the 20 cities, led by Detroit (down 7.8%), San Diego (down 5%), Boston (down 4.7%) and Washington (down 4.3%). On the other hand, prices have risen 10.6% in the past year in Seattle, 7.7% in Portland, Ore., and 7.3% in Charlotte, N.C. Falling home prices will exacerbate credit problems, because many borrowers will not be able to refinance their loan or sell their house because they owe more than it’s worth. The 10-city Case-Shiller index turned negative in mid-1990 and remained negative for much of the next three years. Prices did not return to the peak seen in October 1989 until January 1998.
