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Home price slump deepens

chart_double_dip_deepens.top.gif By Les Christie, staff writer

NEW YORK (CNNMoney) -- November home prices continued their latest slump, falling 1% compared with October, according to the latest S&P/Case-Shiller Home Price Index of 20 metro markets.

San Diego was the only market that didn't slip, posting a slight gain of 0.1%. The overall index fell for the fifth straight month and prices are at about the same level they were in mid-2003.

"With these numbers, more analysts will be calling for a double-dip in home prices," said David Blitzer, spokesman for Standard & Poor's.

The worst-hit market during the month was Detroit, where prices fell another 2.7%. That was especially troubling considering how low that city's prices already were. In Washington D.C. prices inched down only 0.1%, making it the second-best performing city behind San Diego.

The bleeding in some of the bubble markets seems to have slowed, with Las Vegas (-0.4%), Miami (-0.2%) and Tampa (-0.8) all recording losses of under 1%. But nine markets -- Atlanta, Charlotte, Chicago, Detroit, Las Vegas, Miami, Portland, Ore., Seattle and Tampa, Fla. -- are all at their lowest levels since they peaked during the boom.

The latest downturn put prices 1.6% lower than 12 months ago, slightly worse than industry expectations. A panel of analysts put together by Briefing.com had forecast a 1.5% annual decline.

The loss was "bigger than I expected," said Pat Newport, a real estate market analyst for IHS Global Insight. "I think it's still a response to the [home buyer] tax credit going away."

The credit, which paid homebuyers up to 10% of the purchase price up to $8,000, expired in September 2010. Analysts say it pushed a lot of homebuying forward, as many people rushed to buy to get in under the wire.

Despite the bad report, Newport said there are still a couple of reasons for optimism. He pointed out that existing home sales have been on the rise recently, topping an annual rate of 5 million sales in December. He added that home prices calculated by the Federal Housing Finance Agency have shown less decline than Case-Shiller. The FHFA index was unchanged in November after dropping 0.2% in October.

The FHFA index covers the entire national market and not just 20 cities, but it only includes data from homes sold that had mortgages guaranteed by Fannie Mae and Freddie Mac, the government run mortgage companies.

Record 1 million homes repossessed in 2010

That means Case-Shiller's calculations include a higher percentage of distressed properties -- foreclosures and short sales -- since Fannie and Freddie would not guarantee the exotic types of mortgages that generally go bad.

Barclay's Bank analyst Theresa Chen doesn't expect a reversal in housing market trends any time soon, since there is no end in sight to the foreclosure crisis.

"We expect softness to persist," she said, "as home prices continue to face headwinds from the large pipeline of foreclosures entering the market." To top of page

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