Case-Shiller index and home price declines
The Case-Shiller index came out this morning with more news on home price declines but there is somewhat of a disconnect between the headline and the story.
The Headline: Home prices falling everywhere: S&P Down 4.5% nationally over past year, says Case-Shiller
The highlights of the story.
Home prices fell in September in all 20 major cities covered by the Case-Shiller price index, even in cities that had been holding up before the August freeze in mortgage markets, Standard & Poor's reported.
For the first time in this housing cycle prices in all 20 cities dropped from the previous month, with the biggest declines in the bubble cities of Miami, Phoenix, San Diego, Las Vegas, Los Angeles and Tampa.
Former boom towns in Florida and Southern California have now passed Detroit for the dubious honor of having the largest declines in the past year. Prices are still up in the Pacific Northwest and in areas of the South, but they're rising at a slower pace.
Fifteen of the 20 cities tracked in the index have seen prices fall in the past year
Please read the story courtesy of Marketwatch. Click here.
The basis for the headline is the price drop from August to September and it seems more appealing to announce that home prices are falling everywhere on that basis. While prices have remained stable in the Charleston South Carolina real estate market, it appears the South has held up very well compared to other parts of the country.
While there have been some foreclosures in the Charleston area, they remain far below the previously overheated markets that are experiencing the most severe price declines. The stricter lending standards are making it more difficult for marginal borrowers to obtain a mortgage and therefore demand is currently down while inventory remains stubbornly high.
From a buyer's standpoint, it is quite easy to buy a home today at below market prices in the Charleston real estate market and if prices remain stable or possibly decline somewhat, you are still well positioned to weather the housing storm. The real estate market remains somewhere between the "rosy" ads being run by the National Association of Realtors (r) and the grim reports from the media.
As to sellers, interestingly, I played golf last week with a colleague from Savannah who indicated the market there was much like we are experiencing in Charleston, sellers are still struggling to understand why their homes are not worth what they were at the very peak of the market.
The simple answer, supply and demand. As a seller, you are competing with 7 other homes for the buyer's interest, if you don't price it to market, it won't get shown, if you aren't flexible if and when you receive an offer, the buyer will purchase a different house. They can and they will.