Home Prices Continue To Fall

The other day I was looking at the S&P/Case-Shiller Home Price Indices.  The indices follow trends in home values in several of the country’s largest metropolitan areas.  With almost no exception every index has shown a sharp decline since the latter half of 2006.  Based on residential real estate indicators, provided by Standard & Poors June 2008 report, there is no sign of a turnaround.  In fact, all mortgage delinquency indicators have continued to rise quarter over quarter since the end of 2006.  For example, foreclosures started, as a percent of all loans, in Q1 of 2007 was 0.40%.  As of Q1 2008 this figure has risen to 0.99%.  Delinquency rates, regardless of loan type, have continued their climb in all categories.  Below is a graphical representation of the indices covering a period from 1987 through April 2008:

As disheartening as all this appears the dip has to bottom out somewhere.  The question of course remains when and how far.  I don’t want to spend too much time on this topic, but at the time the dot com bubble burst, I was working as a financial advisor for Morgan Stanley.  The graph above bears a strange resemblance to the trends of other market indexes I pored over with my clients during this period.  Keeping this in mind I am cautiously hopeful but also believe that the dip may end up squaring out for some time before climbing again.

Reference: S&P/Case-Shiller home Price Indices

Technorati Tags: residential real estate indicators, home prices, home values

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