Case-Shiller housing numbers point to 22 percent local price drop since ’06 peak–and that’s the good news

Last week Standard & Poor’s released its Case-Shiller house price index for the month of November 2008. Of the 20 metro housing markets included in the survey, the Twin Cities logged the 10th largest year-over-year decline at 16.3 percent. That’s slightly better than the index total of 18.2 percent.  The Wall Street Journal has published a sortable table with those numbers. Cumulatively, as Floyd Norris points out, the local market has dropped 22 percent from the 2006 market peak. Again, that’s a bit less dire than the index-wide total of 25 percent.

More broadly, November marked the eighth month in a row that none of the 20 metro areas in the CS index posted a year-over-year gain, and the 28th month in a row that the index as a whole has gone down (per CNN Money).

And those numbers may be in for a serious downward jolt in the months to come thanks to what analysts are calling the “ghost inventory” hidden in the system. A recent four-state study by RealtyTrac tracking the number of foreclosed homes in its own database versus the number listed in the MLS system used by realtors found that RealtyTrac had three times as many foreclosed properties in its records.

If the trend that emerged in the four states studied by RealtyTrac (California, Wisconsin, Maryland, and Florida) proves to reflect a national average, that could mean as many as 1 million more homes for sale than most analysts had supposed. Les Christie of CNN has written a good summary of the possible implications. 

Meanwhile, another real estate tracking and sales site, Zillow, reported earlier this week that the U.S. housing market lost $3.3 trillion in value in 2008. That’s on top of a $1.3 trillion loss in 2007. All told, Zillow now estimates that housing value losses in America have reached $6.1 trillion compared to the ’06 market peak.

And finally, I should note that there’s a new book about the housing crisis that’s garnering a lot of attention. Contagionby a former Goldman Sachs investment banker named John R. Talbott whose past writings correctly predicted the collapse of the tech stock bubble and the housing bubble–argues that house price declines are still in their early stages and will eventually tumble back to the inflation-adjusted equivalent of 1997 prices. I haven’t had a chance to see the book yet, but here’s a Bloomberg News review, and you can read the first chapter online.

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Comments (1)

  1. Submitted by dan buechler on 02/05/2009 - 10:52 pm.

    Steve, I like your writing but could use more graphs or other visual aids. Saw the Time magazine graphs showing the net loss in value in the top 5 banks and was shocked. Also a little populism sorta like Bruce Anderson of the AVA would be nice. Keep up the good work!!

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