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Home Prices Down To 2003 Levels in January

Existing areas show double-digit declines, even with marginal improvements

March 31, 2009

The 10-City Composite Index showed a year-over-year decline of 19.4 percent and the 20-City Composite had a 19.0 percent annual decline.

"Home prices, which peaked in mid-2006, continued their decline in 2009," says David M. Blitzer, Chairman of the Index committee at Standard & Poor's. "There are very few bright spots that one can see in the data. Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines, and nine of the MSA's falling more than 20% in the last year. Indeed, the two composites are very close to that rate and have been reporting consecutive annual record declines since October 2007. The monthly data follows a similar trend, with the 10-City and 20-City Composite showing thirty consecutive months of negative returns."

As of January 2009, average home prices across the United States are at similar levels to what they were in late 2003. From the peak in the second quarter of 2006, the 10-City Composite is down 30.2 percent and the 20-City Composite is down 29.1 percent.

All 20 metro areas are reporting negative monthly and annual rates of change in average home prices. Seven metro areas and the 20-City Composite recorded a record monthly decline in January.

In addition, seven metro areas reported declines in excess of four percent in the month of January alone. Phoenix led with a report of -5.5 percent. Every MSA has had at least five consecutive months of decline, dating back to September 2008. On a marginally positive note Cleveland, Los Angeles and Las Vegas are reporting a relative improvement in year-over-year returns, in terms of lesser rates of decline than last month's values. Furthermore, Las Vegas, along with five other metro areas, showed a marginal improvement in monthly returns, albeit still negative.

The three worst performing cities, in terms of annual declines, continue to be from the Sunbelt, each reporting negative returns in excess of 30 percent. Phoenix was down 35.0 percent, Las Vegas declined 32.5 percent and San Francisco fell 32.4 percent. Dallas, Denver and Cleveland faired the best in terms of annual declines down 4.9 percent, 5.1 percent and 5.2 percent, respectively.

Looking at the data from peak-thru-January 2009, Dallas is the least hurt, down 10.8 percent from its peak in June 2007, while Phoenix is down 48.5 percent from its peak in June of 2006. The rates of decline from the individual heights of each market are evidence of how much each market has taken back in terms of the gains earned in the past 10-15 years.

All of the 20 metro areas are in double digit declines from their peaks, with nine of the MSA's posting declines of greater than 30 percent and five of those - Las Vegas, Miami, Phoenix, San Francisco and San Diego — in excess of 40 percent.

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