Home prices declining, current nationwide prices at 2004 levels

We all know about the “boom and bust” experiences in California, Florida, Nevada and Arizona, however, a new group of states is emerging with double-digit declines. In the past year these have included Washington, Illinois, Maryland, Oregon, Massachusetts and Virginia.

Pennsylvania continues to avoid membership in this club.

A new study by First American CoreLogic reports continued house price declines during February 2009. Current prices are now back at 2004 (so much for even gradual appreciation!). The study finds that more than 700 housing markets are in decline and that more than 100 housing markets showed double-digit declines. (Only 400 were declining six months ago.) Mark Fleming, chief economist at First American CoreLogic, says:

Over one-fifth of U.S. housing wealth has vanished and home prices continue to decline. Decreases are now being driven by rising unemployment and a high volume of distressed home sales. Given that home prices are generally a lagging indicator of market health, we believe the largest declines have already taken place, but we expect home prices to continue to decline into 2010 as economic conditions and excess housing inventories dampen prices.

Some experts look to past housing bubbles around the world and find that most bottom-out after reductions of about 30 to 35 percent from their peaks. In the current U.S. housing crisis, some markets have declined 40 to 50 percent from their high points (though none in Pennsylvania) and the average decline for the nation is now approaching 25 percent.

This situation is further evidence that the future looks perhaps a bit brighter – but we’re not out of the woods yet. The good news is that housing in the Keystone State continues to hold up well in comparison.