US Home prices

RGE Monitor

# The S&P/Case-Shiller Index fell 18.5% y/y in Dec-08, (fastest on record) driven by climbing foreclosures and declining home sales. All 20 cities covered in the survey showed a decrease in prices, with 8 of the 20 areas showing record rates of annual decline in excess of 20% y/y.
# As of Dec 2008, average home prices are at similar levels to what they were in Q1 2004. From their peak in mid-2006, the 10-City Composite is down 28.3% and the 20-City Composite is down 27%.
# Q4 2008: The decline in the S&P/Case-Shiller U.S. National Home Price Index recorded an 18.2% decline in Q4 2008 versus Q3 2008, largest in the series' history. This has increased from the annual declines of 16.6% and 15.1%, reported for the Q3 and Q2 2008, respectively.
# Kiesel: U.S. housing prices, despite having fallen roughly 20% from their peak back in the second quarter of 2006, remain 10%–15% overvalued based on long-term historical measures such as price-to-income, price-to-rent and price-to-economic growth. In addition, total new and existing inventories of 4.7 million units are higher now than at the beginning of the year, and roughly 12 million homes are now in a negative equity position in which homeowners owe more on their mortgage than the home is worth. More challenging credit markets also mean fewer potential buyers. As a result, in terms of housing’s total peak-to-trough decline, a 30%–35% total decline from peak now looks possible
# RGE Monitor: based on a range of indicators (real home price index by Shiller 2006, price rent ratio and price/income ratio) the fall in home prices from their peak will be in the 30-40% range
# CEPR: Nominal prices have now declined 19.5 percent from their peak two years ago, which implies a real decline of approximately 27 percent. This means that the bubble is approximately 60 percent deflated. This corresponds to a loss of more than $5 trillion in real housing wealth
# OFHEO index fell 0.6% m/m in July and it is down 5.3% on a y/y basis. This is the sharpest decline for this cycle and on record
# Fitch (via Calculated Risk): expecting home prices to decline by an average of 25 percent in real terms at the national level over the next five years, starting from the Q2 2008
# Wachovia:the S&P/Case-Shiller 10-city composite index will fall 28.6% on a peak-to-trough basis. OFHEO purchase only index will decline around 22%
# IMF: the baseline scenario for the U.S. economy assumes a 14–22% drop in house prices during 2007–08
# PMI Group: U.S. home price declines will probably double to a national average of 20 percent by next year, with lower values most likely in metropolitan areas in California, Florida, Arizona and Nevada
# Krugman: My preferred metric is the ratio of home prices to rental rates. By that measure, average home prices nationally got way too high. We'll probably basically retrace all that. So that's about a 25% decline in overall home prices (CNN)
# Davis, Lehnert and Martin: prices would have to fall 15% over five years - assuming rents rose 4% a year - to bring rent/price ratio back to its long-term average
# Goldman Sachs (Calculated Risk): Home prices to fall 15% w/o recession and 30% in case of a recession
# Shiller: home prices to fall up to 50% in some areas

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