Wednesday, February 23, 2011

Home Prices Plummet in Most Big US Cities

According to reports, home prices have fallen to their lowest point since the housing bubble burst years ago. Values dropped in most major cities and are expected to fall further. Not great news for homeowners…

From Yahoo Finance:

High unemployment, stricter lending rules and fears that prices will continue to fall are among the reasons why few people are buying homes. A rising number of foreclosures are also weighing down prices. And as more people get stuck in depreciating homes, housing could slow the economy.

Across the country, the housing industry is recovering unevenly. Many of the cities now setting new lows have been struggling with high unemployment, more foreclosures and, in some cases, a delayed response to the housing bust in 2006 and 2007.

Homes in more established areas -- those that had little room to build during the housing boom -- are doing a better job holding their value. Coastal cities in California and Northeast are seeing much smaller price declines. In Washington and San Diego, home prices even rose over the past year.

Still, many people who want to buy can't. Nearly 25 percent of households cannot move because they owe more on their mortgage than their home is worth, according to Capital Economics. An additional 25 percent can't qualify for a new mortgage because selling their homes would leave them with too little money for a down payment.

"We're likely to see new lows hit across most major markets at some point in 2011," said Mark Vitner, a senior economist at Wells Fargo Securities. "We're afraid of all this turning into another vicious cycle."

Housing prices in all but one of the 20 cities tracked by Standard & Poor's/Case Shiller fell in December from November. And the overall index declined for the sixth straight month. Washington was the only metro area where prices rose month to month.

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