Home Prices Drop 10.6% in 2008: Report

In the largest decline in over 30 years, National home prices dropped 10.6 percent in 2008, according to First American CoreLogic’s LoanPerformance Home Price Index released Monday. Since U.S. home prices reached their peak in 2006, prices have declined a cumulative 18.5 percent. The bursting housing bubble hasn’t showed signs of a slowdown just yet, as full year 2008 prices fell in 35 of the nation’s 50 states. California was of course the front-runner, with a 26.9 percent decline in home prices, followed by Nevada with a 22.8 percent decline, Arizona with a 19 percent decline and Florida posting a decline of 18.2 percent. Since the crest of home prices in July 2006, California has seen a 42 percent cumulative plunge, while Nevada has experienced a 39 percent drop in home prices. “Collateral risk continues to depress the housing market with the top four states for price depreciation accounting for nearly half of all outstanding foreclosures,” said Mark Fleming, chief economist for First American CoreLogic. The company also reported Monday that the number of unique foreclosure filings in 2008 surged 76 percent to 3.4 million, compared to 1.9 million in 2007 and 1.1 million in 2006. “[E]conomic risk is also rapidly rising: California, Nevada and Rhode Island stand out as being among the top 10 states for both price depreciation and highest unemployment,” Fleming said. “Until home prices and economic activity stabilize, mortgage distress will remain high.” If analyzed beyond the state level, First American CoreLogic’s report shows that nine of the top ten “core based statistical areas” that experienced the highest home depreciation in 2008, were located in California — with Salinas, CA posting the highest home price depreciation of over 30 percent. On the opposite end of the spectrum, those areas that experienced the highest home price appreciation included Binghamton, NY — at 7.78 percent appreciation — Plattsburgh, NY, Cedar Rapids, IA, Rocky Mount, NC, and College Station, TX. Write to Kelly Curran at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.