Housing Prices to Tumble Further
Prices are down, along with homeowners' hopes of selling.
May 27, 2008— -- In nearly every American metropolis, the housing downbeat goes on, and the numbers in some cities are staggering.
At the bottom of the heap is Las Vegas. Once America's fastest growing city, it has seen home prices tumble 26 percent since last year.
Not far behind is Miami, where the condo craze crumbled and overall housing prices are down almost 25 percent. The other big losers are in the West: Prices in Phoenix, Los Angeles, San Diego and San Francisco are each down more than 20 percent.
"I think we can probably see another 20 percent decline in home prices in these areas, probably not bottoming until the earliest, the end of next year," economist Michelle Meyer of Lehman Brothers said.
Homeowner Deborah Gorman, 46, understands. She and her husband Mark, 53, decided to sell their home in Pittsburgh when they took new jobs working for an insurance company in New Mexico in 2005. But by the time they put their house on the market, the Pittsburgh metro area was already glutted with inventory.
"We did lower the price significantly, dropped it by about $25,000; at this point, we really just want to be able to pay off the mortgage so that we can kind of move on and not have the stress of owning a house 1,700 miles away," Deborah said. "Once the house had been on the market for nine months, we were starting to get a little bit more than discouraged that it really wasn't going to sell."
Their original listing price was $150,000, but since then, the Gormans have dropped it $25,000. Deborah initially thought their home would sell in about three to six months. But her realtor recently told them that he has had clients in comparable situations sell their house for less than their mortgage, just so they can take out a smaller loan and reduce their monthly outlay.
"It is really kind of disillusioning to realize that, after 20 years, you're really going to walk away with not much," Deborah said.
She hoped to have a small gain from selling her house for a future home, but now that "hope has evaporated."
"It's disheartening when you think you've done everything right. You have a lovely home and it's in a great area and it just won't sell. You really are at the mercy of the market," she said.
A silver lining, however slim, may lie in the sales of new homes, ticking up just over 3 percent from March to April, the first such bump in six months. In one suburb of Chicago, a builder of upscale homes told ABC News that his sales are improving.
"There's just a certain amount of pent-up demand that ultimately, we think, is starting to feed into the market," said Brian Taylor, executive vice president of Dartmoor Homes.
Like most developers, he has to include more upgrades, such as adding stainless steel appliances, granite countertops, and premium wood flooring and lighting fixtures.
But aside from such pockets of prosperity, many others are suffering.
"We judge it to be a temporary blip, higher in new home sales, and we think the trend is stilll very much on the downside," Meyer said.
One more note of caution: The huge inventory of unsold new homes is nearly a 10-month supply nationwide, still far above the six-month supply that would signal a healthy housing market.