HOUSING MARKET: Home prices tumble at record rate - Business

PRINT THIS Popular

Jun. 25, 2008
Copyright © Las Vegas Review-Journal

HOUSING MARKET: Home prices tumble at record rate

Las Vegas leads decline, falling 26.8 percent

By J.W. ELPHINSTONE
THE ASSOCIATED PRESS

Housing in Southern Nevada

CONFIDENCE LEVEL PLUMMETS

U.S. consumer confidence fell sharply in June, sinking to its lowest level in more than 16 years, according to a private industry group.

The report Tuesday also said the group's reading of consumers' expectations hit an all-time low as home prices tumbled while gasoline and food prices rose. A separate index of home prices saw the largest drop since its inception in 2000. The news sent stocks lower in morning trading.

The Conference Board's consumer confidence index fell to 50.4 this month, the lowest since February 1992. The index dropped from 58.1 in May, a much steeper decline than economists expected. The consensus estimate of economists surveyed by Thomson/IFR was 56.5 for June.

Inflation, political flux and job insecurity have created an "uncertainty more acute, perhaps, than any time since 9-11," said William Hummer, chief economist at Wayne Hummer Investments.

"I don't think this can be purged immediately by an election or anything else," he said. "I think it's endemic, deep-rooted and likely to persist."

The reading, based on a survey of 5,000 representative U.S. households, suggests "the economy remains stuck in low gear," said Lynn Franco, the Conference Board's director of consumer research.

THE ASSOCIATED PRESS

Graphic by The Associated Press

A pedestrian walks past windows filled with real estate listings Tuesday in Chicago. U.S. home prices tumbled in April at the fastest rate since a widely followed index was begun in 2000.
Photo by The Associated Press

A sign indicating a reduced price is seen in front of a home for sale in Tacoma, Wash., on May 27. According to the Standard & Poor's/Case-Shiller home price index, no surveyed city stayed above water.
Photo by The Associated Press

NEW YORK -- U.S. home prices, led by sharp declines in Las Vegas and Miami, tumbled in April at the fastest rate since a widely followed index was begun in 2000, with all 20 metropolitan areas surveyed posting annual declines for the first time.

Las Vegas and Miami both continue to post the largest declines, falling 26.8 percent and 26.7 percent, respectively.

Most Popular Stories

Mayor calls Lady Luck casino 'carcass'

CASINOS IN COURT: Testimony heard in Wynn case

Consolidated Resorts files for Chapter 7 bankruptcy

Players turned away at WSOP

Fontainebleau files motion to leave offices

Area economy hits 'pause' period, economist says

NEVADAN AT WORK: Local gaming veteran sees opportunity in small Henderson casino

ONLINE GUY: Palm Pre promising but not ready to replace Apple iPhone in pocket

Las Vegas investor seeks approval of Riviera ownership stake

GAMING BEYOND NEVADA: Sands: Macau back in play

The Standard & Poor's/Case-Shiller home price index of 20 cities fell by 15.3 percent in April versus a year ago, according to Tuesday's report. Prices nationwide are at levels not seen since August 2004.

The narrower 10-city index declined 16.3 percent in April, its biggest decline in its more than two-decade history.

Las Vegas-based Home Builders Research reported a median price of $225,000 for 2,606 existing-home sales in May, a decline of $53,000, or 19.1 percent, from the same month a year ago. It's down $65,000, or 22.5 percent, from the peak median in October 2006.

"In our opinion, the unknown factor that can affect the resale prices during the upcoming months is the short sales," Home Builders Research President Dennis Smith said.

About one-fourth of available home listings in Las Vegas are short sales, offered at less than the mortgage owed, which means they must be approved by the bank before closing escrow.

"And by now, most have heard the stories about how long that can take," Smith said.

Meanwhile, a report from the Office of Federal Housing Enterprise Oversight said U.S. home prices fell 4.6 percent in April from the same month last year, when the index peaked. That was the biggest decline ever in the agency's monthly index, which dates back to January 1991.

The government index is calculated using mortgage loans of $417,000 or less.

While the government report has shown nationwide price declines, the Case-Shiller index has shown far greater drops because it focuses on larger cities where prices rose further during the boom years, and includes riskier loans.

No surveyed city stayed above water, according to the Case-Shiller index. The last holdout, Charlotte, N.C., finally succumbed to the national housing downturn, with prices there slipping 0.1 percent from a year ago.

However, the annual declines in Denver, Dallas and Cleveland were less severe than in the previous month, but Maureen Maitland, a S&P vice president, is reluctant to peg that as an indication of stabilization.

"We wouldn't call a trend on one-month data," she said.

The report also showed prices in eight metro areas increased in April from March, but the gains could be seasonal blips as the home-buying spring season starts up rather than a sign of a turnaround, Maitland said.

Review-Journal writer Hubble Smith contributed to this report.

Share & Save

Leave Your Comment	25 Reader Comments
Terms & Conditions The following comments are provided by readers and are the sole responsiblity of the authors. The reviewjournal.com does not review comments before publication nor guarantee their accuracy. By publishing a comment here you agree to abide by the comment policy. If you see a comment that violates the policy, please notify the web editor. Some comments may not display immediately due to an automatic filter. These comments will be reviewed within 48 hours. Please do not submit a comment more than once.
Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. The Truth wrote on June 30, 2008 07:20 PM: "Am I supposed to believe some voodoo economist that doesn't know our local market? No Thanks, I'm putting my trust in the local experts that know my market and know what is best for me!" So, how's that working for you so far, Mark? I mean, all of the "local experts" denied a bubble existed and have been calling for the bottom for about a year. The local experts in LV are shills, no more, no less. Frank wrote on June 29, 2008 07:03 AM: Let me try and get this right. Home prices are falling faster than LVMPD reputation. Prices are soaring, the heat is extreme. Please answer this. Why would any one want to move to Vegas with all the problems. Isn't there enough where we currently live? doofy wrote on June 26, 2008 02:41 PM: should i just walk away from my car payment too because its value doesnt appreciate?? LV High School Diploma Real Estate Broker wrote on June 25, 2008 08:32 PM: LVRJ forgot to report this story: Housing: It'll get worse By Les Christie, CNNMoney staff writer Jun 12th, 2008 Investors in the S&P Case/Shiller Home Price Index, are still buying futures as if they expect prices to continue to plummet. The index, which tracks the sale price of specific homes as they are sold and resold over the years, is considered to be one of the most accurate home price indicators. "The people who are putting their money where their mouths are," said Perna, "are betting on more losses." Specifically, Case/Shiller investors are betting that Las Vegas prices will fall an additional 22% by November 2009. These markets may have a hard time recovering because, according to Perna, people are afraid to buy right now, because they're concerned about over-paying. That helps explain why price depreciation seems to be accelerating. "The most severe declines are happening right now," said Mark Zandi, chief economist for Moody's Economy.com. mark wrote on June 25, 2008 07:10 PM: This means nothing. Just a week or two ago the RJ wrote a piece describing the bounce in the local market since sales were up the previous month. They had experts saying that we had hit a bottom, and with all of the new hotels being built there wouldn't be a big enough supply of houses for the additional members of our highly skilled work force. Am I supposed to believe some voodoo economist that doesn't know our local market? No Thanks, I'm putting my trust in the local experts that know my market and know what is best for me! C wrote on June 25, 2008 06:10 PM: Thank God we dont have this problem in Canada.Lenders here dont give money away like that.Im sure things will get even worse before they get better. roger wrote on June 25, 2008 03:32 PM: Brandon, paying back the mortgage no matter how underwater they are would be the moral right thing to do. But is it the right thing to do for your finances? Think about it, would you invest money into any asset knowing there is a high probability that you will never get a return ? A house purchased recently for $550k with 20% down, leaving a mortgage balance of $440k, could be worth about $350k right now. Would it make sense to keep paying? How long would it take for the value to go back up to the original purchase price? or even the $440k mortgage balance? And this scenario has nothing to do with subprime, or borrowers who overextended themselves in homes they couldnt afford. It is happening to middle class people all over the country who made purchases in the last 2-3 years. This is why I feel this meltdown is more serious than we want to admit. Brandon wrote on June 25, 2008 02:19 PM: @Dr J: Don't paint the creditors as victims here. I agree that people should pay back their mortgages no matter how underwater they are on the home. But the lenders are just as much to blame for this as the buyers. On another note, it's good to see the RJ finally print a negative story about the recent housing market. It seems as though the last six months have been filled with "The Las Vegas market has hit bottom!" stories. I think we still have a ways to go before we hit bottom. rb wrote on June 25, 2008 11:38 AM: Don't worry NACA is coming. www.naca.com RANDY wrote on June 25, 2008 10:48 AM: HOW LOW WILL IT GO? WELL, LET'S TAKE A RIDE THRU A NEW HOUSING DIVISION. YOU WILL SEE THAT THEY HAVE LOTS WITH BLOCK WALLS AROUND THE LOT AND CHAIN LINK ACROSS THE FRONT. THIS MEANS THEY ARE NOT GOING TO FINISH THE SUB-DIVISION IN THE NEAR FUTURE. THE BANKS ARE NOT LOANING MONEY WITHOUT COLLATERAL. WITH NO WAY TO DETERMINE VALUES ON THE PROPERTIES, THE BANKS AREN'T WILLING TO DO HOME EQUITY LOANS. IF YOU THINK THE CREDIT CRUNCH IS OVER, YOUR MISTAKEN. THERE ARE A LOT OF INTEREST - ONLY LOANS THAT ARE GOING TO RESET IN THE NEXT 24 TO 36 MONTHS. HOW WILL THIS EFFECT THE FINANCIAL INSTITUTIONS WHEN PEOPLE SUDDENLY REALIZE THEY CANNOT REFINANCE THE LOAN AND THEY HAVE NO EQUITY. IN FACT, THEY OWE MORE MONEY THAN THEY STARTED WITH AND THE PROPERTY IS WORTH LESS. I SEE MORE PAIN COMING. IS THE TAX-PAYER GOING TO BE ASKED TO FOOT THE BILL AGAIN? CAN THE TAX-PAYERS AFFORD IT? WE ARE IN A STAG-FLATION ECONOMY. THIS IS THE WORST TYPE OF ECONOMY. EVERYTHING GOES UP IN PRICE BUT, THE WAGES STAY THE SAME. WE ARE SEEING SOME OF IT'S EFFECTS IN THE HOUSING MARKET, FOOD, FUEL, AND SERVICES. SOMETHING WILL HAVE TO GIVE SOON. WE LET OUR FEARLESS LEADERS TAKE US DOWN THIS ROAD. WE NEED NEW LEADERSHIP. Read All Comments