December 31, 2008

US Housing Market in Free Fall

U.S. home prices fall at record pace; 20 largest cities suffer a `free-fall month' as values plunge 18%.

POLITICS - Home values in the 20 largest metropolitan areas in the United States dropped at a record pace in October as the fallout from the US financial crisis caused a housing market collapse, according to new data released yesterday. All 20 cities reported annual price declines in October; prices in 14 of the 20 metropolitan areas surveyed fell at a record rate as the financial crisis reached a critical point.

The price of single-family homes fell 18% in October from a year earlier, according to the closely watched Standard & Poor's/Case Shiller Housing Index.

Home prices have fallen every month since January 2007, their slide accelerating as troubles in the housing market infected the broader economy and brought down financial firms. Prices are falling at their fastest pace on record, a sign the U.S. housing market is a long way from recovering from the current recession/depression.

The 10-city index dropped 19.1 per cent in October, its largest decline in its 21-year history, and the new numbers show the cities that hosted the greatest excesses of the housing boom are suffering the deepest drops.

Prices in Las Vegas and Phoenix, Ariz. fell 32% in October. Home prices fell 31% in San Francisco and 29% in Miami. Prices in New York declined 7.5% in October over the same month a year ago.

Last week, the U.S. National Association of Realtors reported that previously owned homes, which dominate the market, suffered their sharpest drop in more than 40 years.

Housing is likely to deteriorate further in 2009 as the jobs picture continues to weaken. The U.S. unemployment rate is now at 6.7 per cent, its highest point in a decade, and economists predict it will rise to 8 or 10% during 2009, to be accompanied by skyrocketing crime rates.

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