Case-Shiller offers up another depressing spectacle in U.S. housing


You might have thought house price declines were slowing. I certainly had hoped so. The latest data from January 2009 from the S&P/Case-Shiller index suggests this is wishful thinking as year-on-year declines hit another record of 19%. The decline was not only steep, but very broad-based.

Data through January 2009, released today by Standard & Poor’s for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, shows continued broad based declines in the prices of existing single family homes across the United States, with 13 of the 20 metro areas showing record rates of annual decline, and 14 reporting declines in excess of 10% versus January 2008.


House prices declined in every single market from December to January. This has been true for each month since Lehman started the latest phase of the credit crunch. We are now down 30% from the peak. Hardest hit are the former bubble markets in Phoenix, Miami and Las Vegas. San Francisco and San Diego have also lost more than 40% peak-to-trough.

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I had said previously that I expected price declines to slow. The data are not supporting this contention. Therefore, I am moving to a more negative view of the U.S. residential housing market.

Given these types of price declines, it calls into question the assumptions by the Obama Administration regarding the worth of so-called toxic assets now at the heart of their plan to end the credit crisis. Certainly, if this type of price activity continues apace, residential mortgage related assets will continue to fall in value. Meanwhile deterioration in commercial property and credit card markets guarantee further writedowns at banks in the U.S. and elsewhere.

While I had said I do not foresee an average U.S. house price decline greater than 50%, I am not willing to make this statement. House price declines are accelerating, not decelerating.

The New Year Didn’t Change the Downward Spiral of Residential Real Estate Prices According to the S&P/Case-Shiller Home Prices Indices (PDF) – S&P website

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