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Home prices still falling

Atlanta saw the biggest price drop in the last year, followed by Minneapolis.

By MSN Money Partner Nov 29, 2011 2:03PM

This post comes from AnnaMaria Andriotis at partner site SmartMoney.

 

SmartMoney on MSN MoneyHome prices continue to fall, but a new group of cities is now leading the declines and posing new problems for home sellers.

 

Data released today by the S&P/Case-Shiller Home Price Indices shows that, nationally, home prices posted an annual decline of 3.9% in the third quarter compared with a year ago. But home prices fared far worse in cities that up until recently haven't been associated with the housing crisis. Post continues below.

"The poster children of the foreclosure problems are no longer the ones declining the most," says H. Pike Oliver, senior lecturer at Cornell University's Department of City and Regional Planning.

 

Homeowners in Atlanta have seen the biggest price drops over the past year -- down a whopping 10% year over year -- followed by Minneapolis, where home prices are down 7.4%. Also, home prices in Seattle and Portland are down 6.5% and 5.7%, respectively.

 

These cities are dealing with slower economies, high unemployment and foreclosures, says Maureen Maitland, vice president at the S&P Indices.

 

Experts say these price declines underscore a new phase to the housing crisis. While cities in Florida, Nevada and California are still posting losses, experts point out that their problems were largely caused by an overhang of inventory, homes that are now slowly being purchased by buyers. Instead, the cities where home prices are falling the fastest now are dealing with local economies that have stalled.

 

"What's happening now is the regions are beginning to show their differentiation -- some have more sound economies than others," says Maitland.

 

For home sellers, the bottom line is mixed. Would-be sellers who've been sitting on the sidelines until the market improves will have to determine how much longer they can wait, say experts. For the most part, home prices in 2012 could continue to drop or at best stay stable, says Jed Kolko, chief economist at real-estate listing site Trulia.

 

The sellers with the most leverage are those located in or near major cities, says Oliver, who says home prices there have been more stable than those in the suburbs. Homebuyers, he points out, are increasingly looking to purchase a home near major work centers that also helps them avoid long commutes and paying for soaring gas prices.

 

On the buying side, there appears to be more opportunity. While the market remains favorable for first-time homebuyers, it's also opening up to move-up buyers -- those who have a home and are thinking about selling in order to buy a newer, bigger one, says Oliver. If they're living in an area that has recouped some of its losses, they might be able to sell their home at a higher price than they could during the past couple of years while buying a larger home at a still depressed price, he says.

 

But consumers who are considering purchasing a home should plan to stay at least five years, experts say. Inventory remains high -- there are about 3.3 million existing homes on the market, according to the National Association of Realtors -- and it could rise if foreclosures pick up and when banks ultimately sell the foreclosed homes they've been holding on to, says Kolko. The result could be more losses in home values to come.

 

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9Comments
Nov 29, 2011 7:40PM
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I agree until salaries go back up to respectable level around the country this will never be resolved, home prices are going to go down the biggest scam is what the Government and Banks have is they tell you to buy your home but no one really owns a home the banks own them.
To fix this problem we need to bring back Manufacturing Good Paying Jobs and stop this stupid idea that people need to go back to school and learn a new trade so they can adapt!!!
We need to take care of our Country First and then start fixing other peoples problems.
Nov 29, 2011 6:27PM
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Just wait until peak oil hits  and unemployement doubles into a depression.  Why not? I mean, with our goverment moving as slow as snails to support a new economic infrastructure that doesn't depend of the rubberized gas powered auto why wouldn't it happen. Home values where inflated in 98 and when they rose 3 fold they became even more ludicrous. Three decades of stupidity and the general public just doesn't get it. Home ownership is a scam the government and the banks hold over us and by extension we hold over ourselves. I say let it burn to the ground. Let america go back to its roots as a nation of principle. If you can't afford it, you can't have it.

Nov 29, 2011 8:05PM
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Deflation in home values, deflation in wages (buying power) .. Main Street is in a deflation mode where the recession is only getting worse.  How long is it going to be before Congress, the Fed and Wall Street wake-up for some BOLD moves to resuscitate the American economy? 
Nov 29, 2011 7:01PM
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Home prices are not going to stabilize until wages for the middle class stabilize or begin to rise.

There is far too much cheap labor in this country for the available jobs and as long as wages are at a level that won't allow home ownership, home values will decline.

 

There isn't a shortage of home buyers in America.  There's a shortage of income!!!!  Fix that problem, and you have solved the housing crisis.

 

How?  Redistribution of wealth.  When 20% of the population controls 84% of the wealth, something has gone horribly wrong.  Trickle down economics is a catastrophic failure!!!  It hasn't worked and it won't work.  Because greed is far more powerful than compassion.

 

It has ruined the Free Enterprise System, Capitalism  and the American dream!  But hey, let's not change anything.  That just wouldn't be American!!

 

Nov 30, 2011 3:29PM
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To get out  of   this   mess   taxes will  have   to  be  raise ( temporarily )  ,  cuts   made   to  the  public employee  wage  and   benifits packages  at  the  least  for  new   hires .  medicare cuts . medi cal cuts,  EVERYTHING .

We   can   no longer   have  what  we  want    and   think  its  what  we   need  .  and  put  it  on  a  credit  care  or   borrow  on  the  house  to  get   it  .   The  goose   has  stopped  laying   golden  eggs  for  sure  . 

 

Things  like   folks    being  able   to   retire  at    55  or  60   and  make   more   than  they  were  making  when  the  worked   has  got  to  stop  .  I  am   84   and  I   never  thought   " how   can   these   young  buy   these  fancy  homes  and  make   the  large  payments   it  cant  last  "   and  it  didnt.  IMO   it  is  all   due   to   the  relaxing  of   credit  .  I   can    remember  when   my  kids  were geting   pre approved    applications    for   credit  cards    and    they  were   not   even   out  of  school  !!!!!!   It  was  insane 

Nov 29, 2011 8:38PM
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A home is not an investment until the day it is sold, until then it is only a shelter to eat sleep and a safe place to be until You go to work, a million years ago We walked out of a hut looked around and thought where do I get water and food, today We walk out of a 5,000 square foot house and say where can I get money for a huge boat or car like My neighbor,  its all about priority, new ipod anyone? 
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If you would really like to see why our housing mess got so out of hand, watch this video from 2004.

 

http://www.youtube.com/watch?v=__1Vfwq2og8

Nov 29, 2011 8:21PM
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Hey I know,  why don't we just give the rich more tax breaks.

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Well gosh darn it, I sure wish our morally superior political officials would get together and involve our "daddy knows best" government deep into this pesky housing issue, you know our best interests are always well looked after by them!
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