- Dennis Norman
According to a report issued by First American CoreLogic the rate of decline in U.S. home prices improved in August with prices 10.1 percent below August 2008, compared with July’s year-over-year price decline of 11.6 percent and June’s decline of 14.1 percent.
Obviously these numbers are being impacted by the number of distressed sales, which in some parts of the country can be over 50 percent of all home sales. If distressed sales are excluded from the numbers then, according to the report, year-over-year prices declined in August by -6.2, in July by -6.8 percent and in June by -8.3 percent. This illustrates the significant negative impact distressed sales are having on the housing market.
First American CoreLogic also reported that for the five months beginning in March 2009, they have seen month-over-month increases in home prices, with and without distressed sales.
Now for the bad news. First American CoreLogic is projecting that home price declines will continue throughout the remainder of 2009 before hitting bottom in March of 2010. “The projected declines in home prices are predicated on the expiration of the homebuyers’ tax credit and the growing number of homes entering the foreclosure process. While the tax credit has given a short-term boost to both home sales and volume, its termination, combined with projected increases in foreclosure inventories, will place additional downward pressure on house prices this winter.”
Other highlights of the report include:
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Including distressed transactions home prices have fallen 28.1 percent from the peak in April 2006. Excluding distressed properties prices have fallen -20.7 percent from the same peak.
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When distressed sales were included, Nevada (-24.4 percent) remained the top-ranked state for annual price depreciation with Arizona following close behind (-19.5 percent). Florida (-16.8 percent), California (-12.9 percent) and Oregon (-12.5 percent) round out the top five states for price declines.
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Excluding distressed sales, the worst five states for year-over-year price declines changes slightly. Nevada (-19.8 percent) still holds the top spot, followed by Florida (-14.9 percent), Arizona (-14.8 percent), Idaho (-10.6 percent) and Washington (-10.5 percent).
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The rust belt markets (MI, OH, IN) have now replaced the sun belt markets (CA, FL, NV, AZ) as those for which First American CoreLogic is projecting the largest further declines in house prices.
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