Record Home Price Slump

Fourth-quarter report from National Association of Realtors shows largest price drop on record as markets with price declines now outpace those with gains.

CHRIS ISIDORE / CNNMoney 15feb2007

NEW YORK — The slump in home prices was both deeper and more widespread than ever in the fourth quarter, according to a trade group report Thursday.

Prices slumped 2.7 percent in the fourth quarter compared to the fourth quarter a year earlier, according to the report from the National Association of Realtors (NAR). That's the biggest year-over-year drop on record and follows a 1.0 percent year-over-year decline in the third quarter.

In addition, 73 metropolitan areas reported a decline in the fourth quarter, compared to a year earlier. That outpaced the 71 that saw a gain. It was both a record number and percentage of markets showing a decline in the group's quarterly report. Five markets saw prices unchanged.

That decline was a far more widespread than the third quarter, when only 45 markets reported drops and 102 saw gains, or the second quarter when only 26 saw a year-over-year slump in prices. The national median price was still showing a year-over-year gain in the second quarter.

The most recent median prices are down even more: 3.4 percent since hitting record highs in the second quarter. Almost three-quarters of the markets, reported on by the group, saw declines in median prices over the past six months, with eight reporting double-digit declines.

Vacation markets, where investor-buyers had driven up prices during the building boom of 2005, were particularly hard-hit.

The Sarasota-Bradenton-Venice, Fla., market saw the biggest year-over-year decline in the fourth quarter, with prices plunging 18 percent.

When looking at the change between the fourth quarter and the second-quarter peak, the Palm Bay-Melbourne-Titusville, Fla., market saw the biggest drop, with median prices plunging 19.5 percent.

But the weakness in prices wasn't restricted to those kinds of markets. Springfield, Illinois, reported a 16.2 percent drop in the fourth quarter compared to the third quarter, the biggest decline during that time frame, along with a 10.4 percent decline compared to a year earlier.

Still, the trade group statement said it believed that the worst was over for the drop in prices.

"Examination of data within the quarter shows home prices stabilizing toward the end," said a statement from David Lereah, the NAR's chief economist. "When we get the figures for this spring, I expect to see a discernable improvement in both sales and prices."

Part of the decline in prices was attributable to the drop in sales pace. Total existing home sales, including single-family and condo, were at a seasonally adjusted annual rate of 6.24 million units in the fourth quarter, down 10.1 percent from a 6.94 million-unit level in the fourth quarter of 2005.

And the slower pace of sales, coupled with investor-buyers from 2005 trying to sell homes and condos they had bought, created a glut of homes on the market, according to other real estate readings, which also fed into the decline in home prices.

NAR President Pat Vredevoogd Combs, a Grand Rapids, Mich., realtor, admitted the group doesn't expect to see a big gain in 2007 statistics.

"Right now, buyers are responding to seller pricing and incentives, and there's a bit of a pent-up demand as a result of buyer hesitation during the second half of 2006," she said in the group's statement. "We're not looking for big changes, but a gradual rise in sales and home prices is projected - that will be good for the overall housing market and related industries."

She said that since most homeowners stay in a home six years on average, a look at five-year price gains shows most homeowners are doing OK despite the recent weakness. The median five-year price gain is 41.8 percent, according to the group's figures.

The nation's leading homebuilders have all reported declining prices for new homes, which are not captured in this report. KB Home reported a net loss of $49.6 million, or 64 cents per share, for the fiscal fourth quarter ended Nov. 30, earlier this week. Other leading builders reporting weakness in prices include Lennar, Pulte Home, Centex, D.R. Horton and Toll Brothers.

The most expensive market in the latest report was San Jose-Sunnyvale-Santa Clara, Calif., where the median home price $760,000. That was up $20,000, or 2.7 percent, from a year earlier but down $19,000, or 2.4 percent, from the third quarter and off $35,000, or 4.4 percent, from the second-quarter peak.

The cheapest market was Elmira, N.Y., where the median price was $78,400. That was off 0.5 percent from a year earlier and down 16.2 percent from the third quarter, which is when prices there peaked.

Despite the record weakness, there were some markets that showed strong price gains. The best was Atlantic City, N.J., where the median price was $339,800, up 25.9 percent compared to a year earlier.

source: 15feb2007

Top 10 foreclosure markets

Greeley, CO
Median home price: $163,700
Portion of households in foreclosure: 0.59%
Change since January: 14.7%

Aggressive residential development and risky loan underwriting have combined with stagnant wages to give this area a foreclosure rate about seven times higher than the national average.

Detroit, MI
Median home price: $118,800
Portion of households in foreclosure: 0.51%
Change since January: 81.1%

The auto industry shows no sign of recovery; Ford just announced a quarterly loss of $5.8 billion. Houses are hard to unload at any price.

Miami, FL
Median home price: $349,900
Portion of households in foreclosure: 0.37%
Change since January: 91.2%

A cooling economy, plus rises in property insurance premiums, energy prices and interest rates have made it tougher for home owners, especially for those who bought in at recent high prices.

Indianapolis, IN
Median home price: $123,000
Portion of households in foreclosure: 0.35%
Change since January: -16.3%

This big automotive industry supplier city has suffered economic setbacks and falling home prices have made it more difficult for homeowners in jeopardy from bailing out with some profit.

Fort Lauderdale, FL
Median home price: $360,800
Portion of households in foreclosure: 0.34%
Change since January: 118.5%

Many of the properties entering into foreclosure proceedings in South Florida do not move through the entire process. Steep rises in prices the past few years enable many owners to sell out before losing their properties entirely.

Denver, CO
Median home price: $246,300
Portion of households in foreclosure: 0.33%
Change since January: 9.2%

The impact from past job layoffs in the telecommunications industry and a building boom that ran past demand have finally hit this otherwise booming city and made it harder for homeowners to unload their properties at a profit.

Dayton, OH
Median home price: $117,400
Portion of households in foreclosure: 0.33%
Change since January: 12.6%

Advocates for homeowners say lax state regulations have made Ohio owners particularly vulnerable to predatory lenders and boosted the foreclosure rate.

Dallas, TX
Median home price: $156,100
Portion of households in foreclosure: 0.31%
Change since January: -34.4%

Thanks to lax regulations on growth, developers have steadily added to housing inventory, which has depressed prices and made it difficult to sell existing homes and get out from under unaffordable mortgages.

Fort Worth, TX
Median home price: $125,900
Portion of households in foreclosure: 0.31%
Change since January: -13.4%

Stagnated income and rising property taxes have contributed to the foreclosure spike occurring all over north Texas.

Atlanta, GA
Median home price: $166,800
Portion of households in foreclosure: 0.30%
Change since January: -28.0%

Corporate layoffs and cuts in pension plans have combined with resetting interest rates on ARMs to keep Fulton County foreclosures relatively high.

The Bottom 10
U.S. cities where median home prices are expected to drop the most in the coming year.

Five of the cities on the Bottom 10 list are from this region, making the long rural stretch of Highway 99 between Sacramento and Bakersfield look like a treacherous real estate ditch. Home prices shot up here by as much as 60 percent during the past two years as big homebuilders, squeezed out of the Bay Area and Los Angeles by lack of space, arrived in search of raw land at bargain prices. 

Problem is, the Central Valley's base industry (agriculture) creates the lowest-paying jobs, and chronically high unemployment rates persist throughout the region. "A market where housing has increased by so much so fast when unemployment is that high is unsustainable," says Frank Owens, who sits on the board of Fresno's builders association. "This market is going south." 

NAR 4th quarter 2006 home prices 
Metro Area State Median Price
4Q 2005 (000s) Median Price
4Q 2006 (000s) % Change
(1-yr) 


Stockton, CA - 9.7% 
Merced, CA - 8.9% 
Reno/Sparks, NV - 8.9% 
Fresno, CA - 7.9% 
Vallejo/Fairfield, CA - 7.8% 
Las Vegas, NV - 7.1% 
Bakersfield, CA - 6.6% 
Sacramento, CA - 6.4% 
Washington, D.C. - 6.3% 
Tucson, AZ - 6.2% 

Latest housing prices for 149 single family home markets.

NAR 4th quarter 2006 home prices 

Metro Area                                State      Median Price  Median Price   % Change
                                                    4Q 2005 (000s) 4Q 2006 (000s)  (1-yr
Atlantic City                             NJ            $269.9         $339.8      25.9%
Salt Lake City                            UT            $182.3         $223.6      22.7%
Trenton-Ewing                             NJ            $243.1         $289.0      18.9%
Beaumont-Port Arthur                      TX            $104.3         $120.0      15.1%
Salem                                     OR            $194.1         $223.1      14.9%
Raleigh-Cary                              NC            $197.7         $226.3      14.5%
Cumberland                                MD-WV         $85.7          $98.0       14.4%
Farmington                                NM            $160.5         $183.0      14.0%
Baton Rouge                               LA            $153.8         $173.4      12.7%
Spokane                                   WA            $168.6         $189.2      12.2%
Seattle-Tacoma-Bellevue                   WA            $335.0         $372.9      11.3%
El Paso                                   TX            $118.4         $131.8      11.3%
Portland-Vancouver-Beaverton              OR-WA         $256.6         $285.4      11.2%
Eugene-Springfield                        OR            $209.0         $230.9      10.5%
Richmond                                  VA            $210.3         $229.4      9.1%
Dover                                     DE            $185.7         $200.5      8.0%
Charlotte-Gastonia-Concord                NC-SC         $183.5         $198.2      8.0%
Albuquerque                               NM            $174.1         $187.5      7.7%
Oklahoma City                             OK            $115.5         $123.7      7.1%
Tulsa                                     OK            $120.0         $128.5      7.1%
Yakima                                    WA            $135.2         $144.6      7.0%
Gainesville                               FL            $197.7         $211.5      7.0%
Virginia Beach-Norfolk-Newport News       VA-NC         $220.5         $235.2      6.7%
Davenport-Moline-Rock Island              IA-IL         $109.2         $116.4      6.6%
Charleston-North Charleston               SC            $198.4         $210.9      6.3%
Ocala                                     FL            $161.1         $170.7      6.0%
Dayton                                    OH            $112.8         $119.5      5.9%
Rockford                                  IL            $114.9         $121.5      5.7%
Decatur                                   IL            $84.5          $89.2       5.6%
Tallahassee                               FL            $176.4         $185.3      5.0%
Austin-Round Rock                         TX            $167.0         $175.2      4.9%
Colordo Springs                           CO            $209.2         $219.4      4.9%
Shreveport-Bossier City                   LA            $125.6         $131.7      4.9%
Baltimore-Towson                          MD            $265.1         $277.9      4.8%
Pittsfield                                MA            $210.7         $220.6      4.7%
Wichita                                   KS            $108.7         $113.4      4.3%
Riverside-San Bernardino-Ontario          CA            $389.9         $406.4      4.2%
Albany-Schenectady-Troy                   NY            $190.8         $198.7      4.1%
Boulder                                   CO            $349.5         $363.1      3.9%
Orlando                                   FL            $261.8         $272.1      3.9%
Gulfport-Biloxi                           MS            $147.0         $152.0      3.4%
Philadelphia-Camden-Wilmington            PA-NJ-DE-MD   $215.1         $222.3      3.3%
Knoxville                                 TN            $148.8         $153.6      3.2%
Los Angeles-Long Beach-Santa Ana          CA            $568.4         $586.5      3.2%
NY: Newark-Union                          NJ-PA         $413.9         $426.6      3.1%
Tampa-St.Petersburg-Clearwater            FL            $223.0         $229.7      3.0%
Erie                                      PA            $99.7          $102.6      2.9%
Amarillo                                  TX            $105.4         $108.3      2.8%
San Jose-Sunnyvale-Santa Clara            CA            $740.0         $760.0      2.7%
Mobile                                    AL            $133.7         $137.2      2.6%
Montgomery                                AL            $136.3         $139.6      2.4%
Syracuse                                  NY            $112.7         $115.4      2.4%
New York-Northern New Jersey-Long Island  NY-NJ-PA      $454.1         $464.4      2.3%
Glens Falls                               NY            $170.5         $174.4      2.3%
Louisville                                KY-IN         $134.6         $137.6      2.2%
San Francisco-Oakland-Fremont             CA            $718.7         $733.4      2.0%
Jackson                                   MS            $142.5         $145.3      2.0%
San Antonio                               TX            $137.8         $140.6      2.0%
Kankakee-Bradley                          IL            $123.6         $125.7      1.7%
Houston-Baytown-Sugar Land                TX            $146.3         $148.6      1.6%
Allentown-Bethlehem-Easton                PA-NJ         $245.7         $249.7      1.6%
Chattanooga                               TN-GA         $132.6         $134.6      1.5%
Fargo                                     ND-MN         $134.6         $136.6      1.5%
Chicago-Naperville-Joliet                 IL            $265.6         $268.1      0.9%
Birmingham-Hoover                         AL            $160.8         $161.7      0.6%
Saint Louis                               MO-IL         $138.8         $139.5      0.5%
Springfield                               MA            $198.6         $199.4      0.4%
Madison                                   WI            $224.6         $225.4      0.4%
NY: Nassau-Suffolk                        NY            $472.4         $473.7      0.3%
Canton-Massillon                          OH            $106.1         $106.2      0.1%
Greensboro-High Point                     NC            $150.0         $150.2      0.1%
Little Rock-N. Little Rock                AR            $125.9         $125.9      0.0%
Reading                                   PA            $143.2         $143.2      0.0%
Honolulu                                  HI            $620.0         $620.0      0.0%
Hartford-West Hartford-East Hartford      CT            $253.8         $253.9      0.0%
Binghamton                                NY            $95.8          $95.8       0.0%
Durham                                    NC            $168.7         $168.6     -0.1
South Bend-Mishawaka                      IN            $89.9          $89.8      -0.1
Portland-South Portland-Biddeford         ME            $245.7         $245.2     -0.2
New Haven-Milford                         CT            $279.7         $278.8     -0.3
Elmira                                    NY            $78.8          $78.4      -0.5
Appleton                                  WI            $129.3         $128.4     -0.7
Champaign-Urbana                          IL            $142.6         $141.6     -0.7
Las Vegas-Paradise                        NV            $315.9         $313.5     -0.8
Denver-Aurora                             CO            $247.5         $245.6     -0.8
Minneapolis-St. Paul-Bloomington          MN-WI         $230.5         $228.3     -1.0
Detroit-Warren-Livonia                    MI            $156.2         $154.6     -1.0
Jacksonville                              FL            $182.2         $180.4     -1.0
Corpus Christi                            TX            $131.2         $129.7     -1.1
Providence-New Bedford-Fall River         RI-MA         $294.4         $291.3     -1.1
Omaha                                     NE-IA         $137.7         $136.2     -1.1
Springfield                               MO            $120.8         $119.4     -1.2
Rochester                                 NY            $112.8         $111.4     -1.2
Bismark                                   ND            $129.1         $127.4     -1.3
Anaheim-Santa Ana (Orange Co.)            CA            $699.8         $690.7     -1.3
Greenville                                SC            $152.2         $150.0     -1.4
Memphis                                   TN-MS-AR      $144.2         $141.9     -1.6
Norwich-New London                        CT            $262.1         $257.9     -1.6
Des Moines                                IA            $147.2         $144.5     -1.8
Pittsburgh                                PA            $114.3         $112.2     -1.8
Milwaukee-Waukesha-West Allis             WI            $214.9         $210.9     -1.9
Sioux Falls                               SD            $136.4         $133.7     -2.0
Atlanta-Sandy Springs-Marietta            GA            $170.2         $166.8     -2.0
Kansas City                               MO-KS         $156.5         $153.1     -2.2
Phoenix-Mesa-Scottsdale                   AZ            $268.4         $262.2     -2.3
Boston-Cambridge-Quincy                   MA-NH         $397.5         $388.0     -2.4
Ft. Wayne                                 IN            $104.1         $101.6     -2.4
Washington-Arlington-Alexandria           DC-VA-MD-WV   $432.9         $421.6     -2.6
Charleston                                WV            $117.3         $114.3     -2.6
Tucson                                    AZ            $246.2         $239.4     -2.8
Lansing-E.Lansing                         MI            $139.1         $135.0     -2.9
Lexington-Fayette                         KY            $150.7         $146.3     -2.9
Green Bay                                 WI            $150.1         $145.6     -3.0
Buffalo-Niagara Falls                     NY            $99.8          $96.6      -3.2
Waterloo/Cedar Falls                      IA            $106.3         $102.9     -3.2
Spartanburg                               SC            $125.6         $121.3     -3.4
Cedar Rapids                              IA            $133.8         $129.2     -3.4
Peoria                                    IL            $112.7         $108.9     -3.4
Cleveland-Elyria-Mentor                   OH            $135.7         $130.9     -3.5
Cincinnati-Middletown                     OH-KY-IN      $143.7         $138.7     -3.5
Hagerstown-Martinsburg                    MD-WV         $222.1         $213.9     -3.7
New York-Wayne-White Plains               NY-NJ         $518.1         $498.4     -3.8
Dallas-Fort Worth-Arlington               TX            $150.2         $144.3     -3.9
Topeka                                    KS            $105.2         $101.1     -3.9
Indianapolis                              IN            $122.0         $117.1     -4.0%
Gary-Hammond                              IN            $128.4         $123.2     -4.0%
Pensacola-Ferry Pass-Brent                FL            $168.2         $161.4     -4.0%
Grand Rapids                              MI            $135.1         $129.5     -4.1%
Kennewick-Richland-Pasco                  WA            $157.7         $151.2     -4.1%
Sacramento--Arden-Arcade--Roseville       CA            $380.9         $365.1     -4.1%
NY: Edison                                NJ            $383.0        $366.9      -4.2%
San Diego-Carlsbad-San Marcos             CA            $607.4        $579.8      -4.5%
Deltona-Daytona Beach-Ormond Beach        FL            $208.9        $198.6      -4.9%
Bridgeport-Stamford-Norwalk               CT            $468.5        $445.7      -4.9%
Worcester                                 MA            $289.5        $274.7      -5.1%
Columbus                                  OH            $147.9        $138.7      -6.2%
Miami-Fort Lauderdale-Miami Beach         FL            $391.2        $366.8      -6.2%
Bloomington-Normal                        IL            $161.5        $151.3      -6.3%
Kingston                                  NY            $260.0        $243.2      -6.5%
Akron                                     OH            $117.8        $110.2      -6.5%
Toledo                                    OH            $112.7        $104.8      -7.0%
Youngstown-Warren-Boardman                OH-PA         $86.7         $80.0       -7.7%
Barnstable Town                           MA            $405.2        $373.5      -7.8%
Reno-Sparks                               NV            $365.5        $332.9      -8.9%
New Orleans-Metairie-Kenner               LA            $178.7        $162.1      -9.3%
Springfield                               IL            $105.9        $94.9       -10.4
Cape Coral-Fort Myers                     FL            $293.1        $258.9      -11.7
Palm Bay-Melbourne-Titusville             FL            $209.5        $173.9      -17.0
Sarasota-Bradenton-Venice                 FL            $367.4        $301.3      -18.0
____________________________________________________________________________________
U.S.                                                    $225.3        $219.3      -2.7%
NORTHEAST                                               $281.7        $274.6      -2.5%
MIDWEST                                                 $168.9        $161.8      -4.2%
SOUTH                                                   $188.7        $181.7      -3.7%
WEST                                                    $353.6        $355.1       0.4%
Source: National Association of Realtors

source: 15feb2007