First American: Inflation hurts home prices
Index shows 37 states with declining prices
By Inman News, Monday, August 18, 2008.Year-over-year declines in national home prices have stabilized in the 10 to 11 percent range, but price declines are accelerating when inflation is taken into account, according to a new analysis by First American CoreLogic.
The First American CoreLogic June 2008 LoanPerformance House Price Index shows home prices down 10.7 percent in June from a year ago. The index concludes that between April and June home-price declines were flat, falling by an average of 10.8 percent. But factor in inflation and real home-price declines accelerated from 15.3 percent in April to 16.8 percent in June.
"Given the surge in inflation, real inflation-adjusted home prices are still declining at a faster rate," said Mark Fleming, chief economist for First American CoreLogic, in a press release.
Fleming said even without factoring in inflation, 37 states are seeing nominal price declines, with prices down more than 20 percent year-over-year in California and Nevada, and more than 17 percent in Arizona and Florida.
Based on home-price expectations for the remainder of the year, Fleming predicts there will be 2.7 million pre-foreclosure and foreclosure filings in 2008, up nearly 50 percent from a year ago.
The 11 markets with the biggest price drops were located in California, Florida, Nevada and Arizona.
They were:
- Los Angeles-Long Beach-Glendale, Calif., -26.55 percent
- Riverside-San Bernardino-Ontario Calif., -26.07 percent
- Oakland-Fremont-Hayward, Calif., -25.67 percent
- Miami-Miami Beach-Kendall, Fla., -24 percent
- Las Vegas-Paradise, Nev., -23.52 percent
- Cape Coral-Fort Myers, Fla., -22.17 percent
- San Diego-Carlsbad-San Marcos, Calif., -22.09 percent
- Phoenix-Mesa-Scottsdale, Ariz., -21.14 percent
- Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla., -20.06 percent
- Orlando-Kissimmee, Fla., -19.15 percent
- Tampa-St. Petersburg-Clearwater, Fla., -15.34 percent
Four out of the five top markets that saw prices appreciate were in Texas: Austin-Round Rock (up 4.02 percent), Houston-Sugar Land Baytown (3.55 percent), San Antonio (2.12 percent) and Dallas-Plano-Irving (1.56 percent). Salt Lake City, Utah, also saw 2.27 percent appreciation in June from the year before.
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Submitted by Mott Marvin Kornicki on August 18, 2008 - 1:29pm.
What goes up- must come down. The drice declines are for the most part in cities and states that experienced the artificially inflated prices that were the result of investor frenzy and easy credit.
Now, with the market stabilizing and real estate prices becoming more normal- Increases of 24% in Miami are back to pre-2005 levels. The more things change, the more they stay the same.
Mott Marvin Kornicki, Broker
www.WaterwayRealty.com
www.Hybrid-MLS.com
305.935.3533 Main Line
Submitted by Wenceslao Fernandez Jr, BS, Realtor, CDPE on August 19, 2008 - 10:34am.
Certainly wind that buyers should heed the warning...buy soon or get cought bidding up prices and dealing with rising rates and shrinking inventories.
Although it is true that inventories are high and foreclosure rates continue to rise, and true as well that we may still have several months of this, trying to time the bottom will be as dangerous to your financial health as timing the top.
We are where we are because of a number of factors. One of the facts of the previous boom is that timing the market does not work. Millions of homeowners (and lenders) could attest to that.
Trying to figure out that it is OK to buy because we've hit the bottom will be as dangerous as having said, "Let me buy now before prices rise too much and the market turns".
By the time you read, hear and see in all media that elusive "All clear" signal indicating that we're at the bottom, if fact what you'll find is that you've missed the bottom!
If you are looking to own for the long haul (3-5 years or more), then buying today is smart. Enjoy shopping while inventories are high, bid down the price, obtain a still-low interest rate mortgage, and enjoy homeownership and its perks (like tax deductions, pride, etc).
Even if prices drop some after you buy, interest rates are likely to be rising, essentially negating your savings. Every 1/4 (.25)% increase in rates, will drop your ability to finance about $8,000 or so.
Essentially, this means that a 6.5% rate may allow you to finance say, $250,000 mortgage while a 6.75% rate may only let you finance about $242,000 or so, while inventories continue to drop and prices begin to stabilize - even increase.
Meanwhile, someone who buys today, will have great deductibility, a tax credit (not a deduction - consult your tax professional or the above link in this article) and you'll have peace of mind knowing that when 2013 comes around (just 5 years from now), many may be kicking themselves for not having invested in 2008, while calling you lucky (wnen in reality, you were a visionary who prepared and met your oppportunities).
www.MiamiRealEstateKing.com
Certified Distressed Property Expert
Miami-Dade County, Florida.