« Navy Federal Slashes Mortgage Rates
Liberty Harbor Apartments in Jersey City, NJ Among Properties for Discriminating Buyers »

Housing Price Declines are Slowing Coast to Coast as Housing ‘Bubble’ Pops

Extreme Overvaluation in Housing Market “Essentially Nonexistent”

WALTHAM, Mass., Sept. 4 /PRNewswire/ — Global Insight, the world’s
leading company for economic and financial analysis and forecasting, today
released the second quarter 2008 update of the U.S. housing valuation
analysis, House Prices in America, showing that single-family home prices
continue to fall across the country, though at a slower rate than last
quarter, and that extreme overvaluation of house prices is essentially
nonexistent, a sign the nation’s housing “bubble” has popped and house
prices reflect a healthy balance in relation to long-term fundamentals.

Nationwide, house prices are down 4.8% from a year ago, this housing
cycle’s peak high point. Prices fell in the second quarter in 152 of the
330 metro areas covered in the study, representing 46% of all single-family
housing units in the U.S. The second quarter decline of 5.3% (annualized)
compares with a 6.6% decline in the first quarter 2008, which represented
267 (81%) of 330 metro areas. For comparison, 295 (89%) declined in the
fourth quarter of 2007.

California, Florida and Michigan continue to account for the most
severe losses, representing 43 of the 50 worst performing metropolitan
areas. California and Florida had been among the most overvalued states for
the past several years. Michigan continues to struggle with the impact of a
slumping economy. Other housing markets in the bottom 50 include Las Vegas,
Nevada; Phoenix, Arizona; and Washington, D.C. Note that each of these
metro areas was previously identified two years ago in our research as
being the most vulnerable to price declines.

Six housing markets, down from a peak of 51 in 2005, and virtually
unchanged from the first quarter of 2008 (five), were judged extremely
overvalued in the second quarter, amounting to 1% of the nation’s single
family housing stock. Extreme overvaluation is limited to Hawaii,
Washington, Oregon and Utah. Pockets of overvaluation remain where they
have been - along the East and West Coasts - while the middle of the
country remains either fairly valued or undervalued, though some previously
overvalued areas of the Northeast and Coastal California and Florida are
now rated as fairly valued. Nevertheless, real estate markets are not ready
to recover. The building and financing excesses of the boom years have yet
to be worked off. There remains a huge inventory of unsold homes on the
market with foreclosures adding more daily.

James Diffley, group managing director of Global Insight’s Regional
Services Group, said, “though the fundamental overvaluation has largely
been removed, downward pressures on home prices remain strong.”

Jeannine Cataldi, senior economist and manager of Global Insight’s
Regional Real Estate Service, added, “although the markets that were
extremely overvalued two years ago are seeing expected price declines,
other areas are seeing price declines due to weak economic conditions. The
market has a lot of inventory to work through before prices will change
course.”

The House Prices in America study, a joint effort by Global Insight and
National City Corporation, examines the top 330 U.S. real estate markets,
representing 78% of all existing housing units and 91% of all related real
estate value, to determine what home prices should be, accounting for
differences in population density, relative income levels, interest rates,
and historically observed market premiums or discounts. Markets with
valuation premiums above 35% were deemed at risk for price corrections
based on the typical degree of overvaluation that preceded the 79 known
local market price declines observed since 1985.

House Prices in America combines a statistical model originally
developed at National City Corporation
(http://www.nationalcity.com/housevaluation) with data largely developed at Global
Insight. More information on Global Insight’s housing valuation analysis is
available at http://www.globalinsight.com/housingvaluation.

About Global Insight

Global Insight, Inc. (http://www.globalinsight.com/) is a privately
held company that brought together the two most respected economic
information companies in the world, DRI and WEFA. Global Insight provides
the most comprehensive economic and financial information available on
countries, regions and industries, using a unique combination of expertise,
models, data and software within a common analytical framework to support
planning and decision-making. Through the world’s first same-day analysis
and risk assessment service, Global Insight provides immediate insightful
analysis of market conditions and key events around the world, covering
economic, political, and operational factors. The company has over 3,800
clients in industry, finance, and government with revenues in excess of
$105 million, over 675 employees and 25 offices in 14 countries covering
North and South America, Europe, Africa, the Middle East, and Asia.

About National City Corporation

National City Corporation (NYSE: NCC), headquartered in Cleveland,
Ohio, is one of the nation’s largest financial holding companies. The
company operates through an extensive banking network primarily in Ohio,
Illinois, Indiana, Kentucky, Michigan, Missouri, Pennsylvania and Florida,
and also serves customers in selected markets nationally. Its core
businesses include commercial and retail banking, mortgage financing and
servicing, consumer finance and asset management. For more information
about National City, visit the company’s Web site at http://www.NationalCity.com .



See Also:

[Via Real Estate Newswire]

This entry was posted on Thursday, September 4th, 2008 at 8:30 am and is filed under Other. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

Comments are closed.