Cities With The Fastest-Falling Home PricesFrancesca Levy, 01.18.10, 06:00 AM EST
These metros saw their price tags drop most in the last three months.
If you've been holding your breath for that home-price upswing that the more optimistic forecasters predicted last year, you're out of luck. The real estate slide--though it's now a mild one as opposed to the double-digit drops of 2008--isn't going to abate soon. Home prices are dipping nationwide, down 1.4% by one measure, and will inch perilously close to their January 2009 bottom, according to a new report from Altos Research, a Mountain View, Calif.-based research firm.
Some metros have it worse than others. San Diego has seen the greatest three-month drop in asking prices of the 27 markets Altos tracks, falling 7.3% between October and December 2009. In that city, volatility is the name of the game. Prices drifted upward for the first half of 2009, prodded by new sellers who were encouraged by modest bumps in pricing. But when fall's seasonal slump hit, the trend reversed dramatically.
Although home prices are always weakest in the fall--they typically peak in the spring and hold steady through the summer--Altos' numbers reflect an unsteady market in general. Its 10-city composite, which it uses as a proxy for the national market, shows a 1.4% drop since October. When stimulus measures like the first-time homebuyer tax credit (which expires in June) and historically low interest rates abate, the market could continue to suffer.
"The combination of an expired tax credit and rising interest rates would be a catalyst for re-testing the [January 2009] bottom," says Mike Simonsen, CEO of Altos.
Behind the Numbers
For our list of cities with the fastest-falling home prices, we used Altos Research's January market update, which looks at asking prices, inventory and days on the market single-family homes--but not condominiums--in 27 of the country's closely watched real estate markets. It uses homes for sale in each city's Metropolitan Statistical Area--a census-defined area that the federal government uses to collect statistics--for its data.