Home Prices Fall Deeper Into the Abyss

Homeowners across the country may be feeling a bit like Mel Brooks’ character from his movie “High Anxiety” now that Standard and Poor’s has released its May numbers for the S&P/Case-Shiller Home Price Indices.

In the movie, Brooks’ character nervously sweats every time he even thinks about getting into an elevator. Well, the nation’s homeowners are sweating it out now, being taken on the descending elevator ride of their lives, especially those living in markets that experienced the largest gains during the boom years and are now freefalling deep into the elevator shaft.

The S&P figures for May show declines in all 20 metro areas reported for the second straight month — nine with record lows and 10 in double digits. Home prices in its original composite 10 metro areas fell to a new record low, down 16.9 percent from a year ago, while its composite 20 metro areas also reported a record yearly decline of 15.8 percent.

Biggest decliners on a yearly basis were Las Vegas (-28.4 percent) and Miami (-28.3 percent), followed by Phoenix (-26.5 percent), Los Angeles (-24.5 percent), San Diego (-23.2 percent), San Francisco (-22.9 percent) and Tampa (-20.2 percent).

Detroit was down 17.4 percent from May 2007 to a level below where home prices stood back in January 2000.

Washington, Los Angeles, New York and Miami are highlighted in a S&P press release as the best performing markets overall since January 2000.

On a monthly basis, from April to May the worse decliners were Miami (-3.6 percent) and Las Vegas (-2.9 percent).

“The overall real estate market continued to slide in May, with the 10-City and 20-City Composites declining by 1.0 percent and 0.9 percent for the month respectively. Since August 2006 there has not been one month where we have seen overall price increases, as measured by the two Composites,” said David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s, in today’s release.

With home prices continuing to decline, both on a monthly and yearly basis, it stands to reason that distressed homeowners are not out of the woods yet if they need to sell their homes to escape foreclosure.

For potential homebuyers, investors and real estate professionals, it means the flow of foreclosed properties should continue into the indefinite future — at least until home prices stabilize somewhere down the abyss and reverse their direction back up the elevator shaft.