Home Price Index Hit With 18% Drop In October

December 30th, 2008 | by alexis |

Homes prices across the country dropped again between September and October, marking the 27th month in a row that the S&P Case-Shiller Index has posted losses. The mean price of homes saw a 2.2% drop, bringing prices back down to where they sat in March of 2004. Altogether, home prices experienced an 18% decrease from last October’s figures.

David Blitzer, Chairman of the Index Committee at Standard & Poor’s, attributes the price drop to the fact that October was the first full month the entire country felt the credit crisis. Up until the time Lehman Brothers filed for bankruptcy on September 15, Blitzer believes “everyone felt relatively optimistic.”

It’s the individuals living in some of America’s largest cities that are now feeling the most cynical. The 20-city composite S&P Case-Shiller uses, comprised of 18 of America’s most populous cities and two composite figures, recorded a -23.4% 1-year change. Every city posted a decrease in prices.

IHS Global Insight U.S. Economist Patrick Newport suggests foreclosures are the main problem. And while the Federal Reserve and the incoming Obama Administration are working to find a solution, Newport believes “trial and error will be a part of the process.”

But despite whatever answers the two entities come up with, the fact remains that the majority of real estate sales this year did consist of foreclosed homes or ones that were forced to short sale to avoid foreclosure. The collapse of credit companies and the stock market has left a large number of Americans who were already stretched thin financially unable to pay their mortgages.

RealtyTrac’s James Saccacio is predicting a “foreclosure storm” in the next few months. While Fannie Mae and Freddie Mac have announced moratoriums on foreclosures, many leading banks have failed to follow suit. Without a way to ease the pressure of high interest rates and overwhelming mortgages, Americans will continually be staring foreclosure in the face.

Nationally, the greatest drop in home prices was seen across the SunBelt region, with Phoenix posting a 32.7% lost from last year and Las Vegas’ figure dropping 31.7%.

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  1. 2 Responses to “Home Price Index Hit With 18% Drop In October”

  2. By jessica kunin on Dec 31, 2008 | Reply

    I know that the Case-Shiller index deals with some pretty big cities, but can anyone let me know if there are any cities in the country - obviously ones that don’t show up on the index - that reported an increase in the price of a home?

  3. By Mikey on Dec 31, 2008 | Reply

    Scary stuff. All of those california investors who were rich on paper are hurting. That’s what they get for buying overpriced real estate for zero down.

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