U.s. Home Price Continues To Decline
(Just in case you are not sold on the fact that the housing market is on an official decline, there is more evidence. )
In a report just released containing second quarter statistics, U.S. home prices declined to the lowest rate increase in six years.
Damian Paletta, columnist for The Wall Street Journal, explains the statistics behind this report in further detail, in the September 5, 2006 article, “U.S. Home-Price Growth Decelerates To Slowest Pace in Over Six Years.”
According to the Office of Federal Housing Enterprise Oversight, U.S. home prices rose by only 1.17 percent in the second quarter of this year.
“‘These data are a strong indication that the housing market is cooling in a very significant way,’ OFHEO Director James Lockhart said in a press statement. ‘Indeed, the deceleration appears in almost every region of the country.’”
The 1.17 percent second quarter increase significantly contrasted with the 3.65 percent quarterly increase from last year. This marked the biggest slowdown since the government began releasing these statistics in 1975.
“The 1.17 percent quarterly appreciation is also the lowest quarter-to-quarter growth since the fourth quarter of 1999, when it stood at 1.12%, OFHEO said.”
Home prices were 10 percent higher in the second quarter of 2006 than they were in the second quarter of 2005. But this is down from the 14 percent year-over-year increase of the first quarter.
“‘The very high appreciation rates we've seen in recent years spurred increased construction,’ said OFHEO chief economist Patrick Lawler in a press release. ‘That, coupled with slower sales, has led to higher inventories and these inventories will continue to constrain future appreciation rates.’”
This slump has been recently forecasted. According to the OFHEO, in June of this year, two states experienced a month-over-month decline in home prices.
“While all states showed price increases over the last year, home prices fell in five states from the first quarter of 2006 to the second quarter. These states are Maine, Massachusetts, Indiana, Ohio, and Michigan.”
“In Massachusetts, which usually ranks among the top 10 in home price appreciation, the market has sagged so much that it now ranks 48 out of the 50 states and the District of Columbia. Thirteen of the 16 Metropolitan Statistical Areas in Michigan saw the average price of a home decrease.”
Again, some state are still seeing year-over-year and month-over-month price increases. The five states with the highest price growth in the second quarter of 2006 are: Arizona, up 24 percent from the second quarter of 2005, Florida, up 21 percent, Idaho, up 20 percent, Oregon, up 19 percent, and Hawaii, up 18 percent.
“The five Metropolitan Statistical Areas showing the greatest price growth since the second quarter of 2005 were Bend, Ore., up 37%, Boise City-Nampa, Idaho, up 29%, Lakeland, Fla., up 27%, Flagstaff, Ariz., up 27%, and Orlando-Kissimmee, Fla., up 26%.”
“The five Metropolitan Statistical Areas with the lowest appreciation over the year were Ann Arbor, Mich., where prices fell 1%, Anderson, Ind., down 1%., Kokomo, Ind., down 0.8%., Detroit-Livonia-Dearborn, Mich., down 0.6%, and Greeley, Colo., down 0.4%.”
Prospective home buyers have been waiting for these prices to decline, and there is no sign of prices rising again in the near future. Sellers should do everything they can to sell, if they need to, including drastically slashing prices.
