Short Sale, Foreclosure and Strategic Default

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Thursday, August 30, 2007

Record decline in Home prices

Real Estate price tracking indices are finally catching up with reality. The case shiller composite which seems a bit sluggish is showing a record annual decline. The true home reality in many markets is if you do not own a home which shows perfectly on a great lot in a very desirable area most likely your home price is down enough to make you wish you had sold. Prices are even more depressed if there are other homes like yours for sale. (I do not say this with glee.)

There are two main reasons causing the news to report information which does not match your purse. One it has been reported that foreclosures are reported as sales. Therefore we are getting a lot a sales at the 2005 and 2006 100% finance price. And two, most of the reports and indices track the median price of a home. Every Realtor knows you do not buy medians you by price per square foot. I know examples where price per square foot is down 20% while the median is down less than 10%. In other words sales prices are staying higher as buyers get more house for the money.




The S&P/Case-Shiller(R) U.S. National Home Price Index Posts a Record Annual Decline in the 2nd Quarter of 2007:


"2007 Q2/ 2007 Q1/ 2007 Q2 2007 Q1 2006 Q4 1-Year Level Change (%) Change (%) Change (%) U.S. National Index 183.89 -0.9% -0.9% -3.2% June 2007 June/May May/April 1-Year Metropolitan Area Level Change (%) Change (%) Change (%) Atlanta 136.12 0.8% 0.6% 1.6% Boston 171.30 0.2% 0.8% -3.7% Charlotte 135.05 1.2% 1.1% 6.8% Chicago 165.96 0.2% -0.1% -0.7% Cleveland 118.54 0.1% 0.8% -3.6% Dallas 126.53 0.8% 0.6% 1.6% Denver 138.09 1.3% 1.1% -1.0% Detroit 109.57 -0.5% -2.4% -11.0% Las Vegas 221.86 -1.3% -0.8% -5.1% Los Angeles 262.12 -0.4% -0.1% -4.1% Miami 264.89 -1.7% -1.5% -4.8% Minneapolis 164.35 0.0% -0.2% -3.8% New York 208.52 -0.8% -0.8% -3.4% Phoenix 212.52 -0.7% -0.5% -6.6% Portland 185.76 0.3% 0.9% 4.5% San Diego 231.37 -0.2% -0.4% -7.3% San Francisco 209.48 -0.7% -0.3% -4.0% Seattle 191.92 0.7% 0.9% 7.9% Tampa 219.37 -1.2% -0.9% -7.7% Washington 233.52 -0.8% -0.3% -7.0% Composite-10 217.07 -0.5% -0.4% -4.1% Composite-20 199.18 -0.4% -0.3% -3.5% Source: Standard & Poor's Data through June 2007"

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