US Home Prices Drop Precipitously, Some See Signs Of Hope

The S&P/ Case Shiller 20 city housing index reported a record decline of 14.4% on a year over year basis. The speed of the decline is nearly five times as fast as the last housing recession. Cities like Vegas, Miami, Phoenix, and Los Angeles, leaders on the upside, suffered the largest declines, over 20%. The New York metro region registered a 7.4% depreciation, although little of that has been seen in Manhattan.
In a separate report, US new home sales rose for the first time in 6 months by 3.3%. The rise was lead by a jump in new home sales in the Northeast, improving sales in the West and Midwest, while sales in the South were still down. Inventory slipped 2.4%.
While the Case/Shiller numbers were gruesome, many are starting to sense that we may be near a bottom. While calling a bottom is very difficult, it may be argued that our housing cycle could be shorter than those in the past. In past market slowdowns, mortgages were held by banks and the process of marking down assets was a very slow process. In today's market, most mortgages are securitized, and banks have been very fast to mark down their assets. This improved liquidity increases the velocity at which assets rise and fall, and could push the market to a bottom in a faster fashion. The jury is clearly still out, so we'll see if this theory holds true over the coming quarters. If you are a contrarian however, it would be hard to resist deeming such bad news as a possible bottom.
Inside The Case/Shiller Numbers (Fin Facts/Ireland)
New Home Sales Rise In April, 1st Time In 6 Months (CBSMarketwatch)

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