The median price of American homes is expected to fall this year for the first time since federal housing agencies began keeping statistics in 1950.
Economists say the decline, which could be foreshadowed in a widely followed government price index to be released this week, will probably be modest ”” from 1 percent to 2 percent ”” but could continue in 2008 and 2009. Rather than being limited to the once-booming Northeast and California, price declines are also occurring in cities like Chicago, Minneapolis and Houston, where the increases of the last decade were modest by comparison.
The reversal is particularly striking because many government officials and housing-industry executives had said that a nationwide decline would never happen, even though prices had fallen in some coastal areas as recently as the early 1990s.
While the housing slump has already rattled financial markets, it has so far had only a modest effect on consumer spending and economic growth. But forecasters now believe that its impact will lead to a slowdown over the next year or two.
“For most people, this is not a disaster,” said Nigel Gault, an economist with Global Insight, a research firm in Waltham, Mass. “But it’s enough to cause them to pull back.”
In this area where I live I see more rehab than purchase of new homes when the prices became so out of line (high). I have seen new contstruction start 2 or more years ago and people just didn’t buy. For example I saw the price of a new condo drop from 159K to 149K in less than a year ago ( roughly 6.0 % or more. ) Our children saved a bundle when this happened.
I haven’t seen a condo in our community go for anything under the high 300s in months. Sounds like your kids know where to live!
MD Brian
So when do our property taxes-based on assessed value-start to come down? LOL!
#3, When people like you begin to contact their elected officials with local information supporting a decrease in assessed value. I did that, just this past week, after getting statistics from the Board of Realtors, local real estate companies, and articles like this one that show the county is still raising the home values while prices are flat (or dropping). I also went to the county records to get actual comparable sales for the past year. If more people will do that maybe next year we will see some adjustments.
Be very, very careful with the median price reporting you will be seeing over the next few months. There will very likely be a sharp drop in median prices in many areas. But it will have little or nothing to do with declining values. Rather, the current contraction of large loan availability, combined with the continuing (and perhaps expanded) availability of conforming (FNMA/FHLMC, <$417k) loans will result in more sales in the lower price brackets, which by itself lowers the median price (which measures the middle of the market).