Doom, gloom and further drops in house values about sums up the latest report from the S&P/Case-Shiller index which tracks home prices in 20 key American markets
Home prices dropped 16% in May from May 2007 – with a decline of 23% since the peak in July 2006. On a month-by-month basis, prices dropped by 0.9% Not all the data were negative. Of the 20 markets tracked, house prices rose in 7. But many economists are saying that the housing market has yet to bottom out because home supply still outstrips demand in some areas of the country. As usual, the previous hot-spots Las Vegas and Miami saw the largest declines – over 28% down from last year.
Despite massive cuts in price ( Las Vegas developer KB Home started slashing prices several months ago and in the 1,400-home Huntington community, a subdivision of two-story stucco houses west of the famed Strip, homes that started at $320,000 a year ago are now listed for $270,000,) the US housing market continues to decline.
According to the National Association of Home Builders, sixty percent of builders cut prices last month to no avail. The reasoning is that buyers are wary of buying a new home for fear that another price cut may be in the offing afterwards and they will have to eat a portion of the sale price immediately. There’s a certain twisted logic to this thinking that’s leaving builders in a no-win situation.
Not so long ago, Las Vegas was the hottest of the red-hot real estate markets. But when sales started falling last year, developer KB Home did something out of the ordinary. Determined not to be caught with a backlog of unsold homes through one of the industry’s down cycles, the builder started slashing prices. In the 1,400-home Huntington community, a subdivision of two-story stucco houses west of the famed Strip, homes that started at $320,000 a year ago are now listed for $270,000.
