We are in for a hellish nightmare! This is what happens when you let CEOs in the W.H.
NEW YORK (CNNMoney.com) -- Home prices continued their plunge during the last three months of 2007, setting a real estate trade group's record for the biggest-ever quarterly drop. .
The national median price drop of 5.8%, to $206,200 from $219,300, was the steepest ever recorded by the National Association of Realtors (NAR), which has been compiling the report since 1979.
NAR officials blamed the liquidity squeeze that began last summer for much of the drop. Home buyers had trouble obtaining mortgage financing, especially for more expensive properties.
"The continuing crunch in the jumbo loan market that began in August has disproportionately reduced the number of transactions in higher price ranges," said Lawrence Yun, NAR's chief economist, in a statement.
Fewer expensive homes were sold, bringing down median prices.
"California, south Florida, D.C., many of the high-cost markets are reflecting that," said Walter Molony, a spokesman for NAR.
Each of the four U.S. regions recorded losses compared with the fourth quarter of 2006. The West took the worst hit, at 8.7%. Prices dropped 4.8% in the Northeast, 5.4% in the South and 3.2% in the Midwest.
In Lansing, Mich., square in the Midwest Rust Belt, prices plunged 18.8% to $109,600. In Sacramento, Calif., prices fell 18.5% to $197,600, and in both Jackson, Miss and Riverside, Calif. prices dropped 16.8%.
Seventy-three of the nation's 151 real estate markets recorded price gains. Cumberland, Md., led the winners with an increase of 19% to $116,600.
The least expensive single-family-home market in the nation got even cheaper, as prices in Youngstown, Ohio, dropped 9.3% to $72,600. The most expensive market, San Jose, Calif., got dearer, with prices up 11.2% to $845,300.
Condo prices fared better. The fourth-quarter median condo price of $221,100 was little changed from the $221,200 a year earlier.
But some areas, mostly Sun Belt cities, took significant price hits.
Cape Coral, Fla., condo prices were down 26% compared with the last three months of 2006 to $202,300, and Tucson, Ariz., prices dropped 19.8% to $128,000. Atlanta prices fell 12% to $141,100, and Las Vegas was off 10.3% to $178,500.
Bismarck, N.D., condo prices recorded the largest gain at 20.8% to $125,000, with New Orleans second at a 17.8% gain to $173,300.
Last year, fourth-quarter home prices were 2.7% lower from the year before.
"The healthiest housing markets today generally are moderately priced and are experiencing job growth and often population growth, which in turn is supporting strong price growth," said NAR's Yun. "Most of the weakest markets have either experienced both job and population losses, or they are experiencing corrections following a prolonged period of rapid price growth."
Many markets have also been affected by soaring foreclosure rates. Large numbers of houses for sale, many repossessed from borrowers, sit empty, depressing prices in cities from coast to coast - but most notably in economically distressed Midwest industrial towns and some once-booming Sun Belt cities.
NAR numbers are arrived at by examining the prices of all homes sold during the period. The median price is the one in which half of all homes sold for more and half for less.
Using median prices rather than mean - or average - prices reduces the impact of the sale of very expensive homes, which would raise mean prices disproportionately.
The NAR take on price trends, usually an optimistic one, was that recent steps taken in Washington would lead to improved conditions later this year.
"Higher limits for FHA loans, which go into effect March 14, will be a big help to first-time buyers in high-cost markets," said NAR President Richard Gaylord.
"Higher limits for conventional loans purchased by Freddie Mac and Fannie Mae will take a bit longer," he said. "When they become available, high-income, creditworthy borrowers in high-cost areas will have access to affordable and safer financing, and that will help unleash pent-up demand."But other industry insiders are predicting harder times ahead. A Merrill Lynch report in January forecast peak-to-trough price declines of 15% in 2008 and another 10% in 2009 before markets begin to recover.
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