Housing prices, decreases in which have widely been considered to have precipitated our current financial crisis, as determined by the Case-Shiller index continue to decline:
Sept. 30 (Bloomberg) — House prices in 20 U.S. cities declined in July at the fastest pace on record, signaling the worst housing recession in a generation had yet to trough even before this month’s credit crisis.
The S&P/Case-Shiller home-price index dropped 16.3 percent from a year earlier, more than forecast, after a 15.9 percent decline in June. The gauge has fallen every month since January 2007, and year-over-year records began in 2001.
The housing slump is at the center of the meltdown in financial markets as declining demand pushes down property values and causes foreclosures to mount. Banks will probably stiffen lending rules even more in coming months to limit losses, indicating residential real estate will keep contracting and consumer spending will continue to falter.
However, when you consider the details on a city by city basis, a somewhat different picture emerges. Housing prices are tanking on the West Coast. There’s no question about that. But when you look at the Midwest and East Coast they’re only declining a bit, holding their own, or even increasing a little. It’s the discouraging numbers from the West Coast that are skewing the nationwide numbers.
The Freddie Mac financials I was reviewing yesterday complained there were about 7-8 states that were causing most of its losses, and among these it was clearly California, Arizona, Nevada and Florida leading.
I still think California’s property tax policy encourages buying as much house as possible to lock in on property taxes, resulting in higher costs and risks for first-time buyers. Otherwise, California, Arizona, Nevada and Florida appear to share the fact that they have dense islands or strips of development and nearby deserts or oceans that impede development outwards.
Not even uniform in Florida: Miami prices are tanking; Tampa is holding its own.