The S&P/Case-Shiller index reports that in May, home prices plunged to 2004 price levels, wiping out four years of appreciation

by Prashant Gopal

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Home prices in May plummeted 15.8% from a year earlier, to 2004 price levels, wiping away four years of appreciation, according to the S&P/Case-Shiller 20-city home-price index released July 29.

Analysts have become increasingly pessimistic that a bottom to the market will get to the end one’s journey anytime soon. The S&P/Case-Shiller report is sole the latest evidence that home prices are swinging backward by at minutest as much force as they swung the other direction during the boom. Places that had double-digit increases a few years past are at this moment seeing prices drop by as plenteous as 28% in a year.

Peter Schiff, president of Darien (Conn.) brokerage Euro Pacific Capital, declared prices could slide to levels last seen before the housing rush began in the early 2000s.

"Demand is way below where it was eight years ago; supply is way above," Schiff said. "Why should prices have existence substantially higher than they were in 2000? The Dow isn’t where it was in 2000. Stocks are cost less than they were. Why should real estate stand revealed as worth more?"

All 20 cities in the S&P/Case-Shiller index experienced annual declines in May and prices fell at record year-over-year rates in nine cities. The largest drops were in places being clobbered by means of foreclosures. Prices were down 28.4% in Las Vegas, 28.3% in Miami, and 26.5% in Phoenix. But several cities saw beneficial employment. Prices in Charlotte, N.C., fell just 0.2%; they dropped 3.1% in Dallas and 4.8% in Denver. Prices actually rose 2.9% in Cleveland and 1% in Boston and Charlotte in May, compared to a month earlier.

The index of 20 cities has been falling for 22 straight months, for a like reason the latest phthisis wasn’t much of a surprise. Patrick Newport, a trappings economist for Global Insight in Waltham, Mass., aforesaid he’s more concerned about the inventory of unsold homes continuing to go in the same proportion that more and more foreclosed homes come onto the market.

Newport plans to extend by three months his earlier forecast that existing home prices would hit bottom in the intermediate of next year.

"If you combine today’s release with the other housing releases, it just tells you that the outlook over the next year is not good," Newport said.

Jim Gillespie, president and chief executive of Coldwell Banker, a division of individually held real estate hercules Realogy, said he is skeptical of the Case-Shiller report because it focuses on particular cities, many of that had runups in the primary half of the decade. They are at that time seeing the biggest drops.

Gillespie said the 15.8% drop in home prices reported by Case-Shiller will unnecessarily scare buyers in much of the heartland whither prices are more unwavering. "Is there a major real class correction going upon? Yes," Gillespie said. "Are we looking at 16% nationwide? Absolutely not."

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