I saw an interesting factoid in some of the day’s analysis of the S&P/Case-Shiller Home Price Index.
The index shows home prices nationwide down 14 percent in the first quarter of this year from a year ago. The Index runs top ten-city and top twenty-city composites, which showed annual declines of 15.3 percent and 14.4% respectively.
Patrick Newport, an economist with Massachusetts-based Global Insight, notes:
Over 1990-2000, the Case-Shiller 10-City Composite Index was flat, after adjusting for inflation. Over 2000–06, its real value rose 78 percent. The index has dropped about 22 percent in real terms since peaking. However, given the current level of unsold homes on the market; the number of foreclosures already in, or about to enter, the pipeline; and the run-up in prices over 2000–06, this index is likely to drop much more.
We constantly talk about how much these price indexes are dropping, but we often forget how far they rose during the housing boom. If you purchased your home before the boom, and you’re still living in it, then the price drops, so far at least, haven’t negated your total appreciation.
It’s really those who bought into the boom toward the very end that are in real trouble and those who took too much equity out of their homes in refi’s that took advantage of those shoddy mortgage products.
Granted that’s a lot, but it’s certainly not the bulk of Americans by far.
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