Formerly resilient areas like Charlotte, N.C., and Boston are struggling, according to latest S&P/Case-Shiller Home Price Index

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By Prashant Gopal

Home prices in 20 greater metro areas nationwide fell 18.2% in November—a record annual pace—as the deteriorating frugality pulled down previously resilient markets, according to the S&P/Case-Shiller Home Price Index released Jan. 27.

All 20 metro areas in the table of contents saw annual worth declines, 14 of what one. were double-digit drops and 11 of which fell by memorial rates. Only Denver and Dallas versed a drop of inferior than 5%.

The index, which is a three-month moving average ending in November, captures the impact of the financial conjuncture following Lehman Brothers’ downfall in September. The November decline was terrible, but it wasn’t plenteous worse than the October distil, said Patrick Newport, U.S. Economist for HIS Global Insight.

"There is so much inventory," Newport said. "Prices are going to continue to drop for quite a while."

But in the worst markets, including Miami, Phoenix, Los Angeles, San Diego, and Las Vegas, the year-over-year price declines—though unfathomable—have remained relatively flat since the summer. A wave of foreclosures has depressed prices so much in those markets that investors and other first-time home buyers have moved in to scoop up bargains. According to a inspect released onward Jan. 26 by the National Association of Realtors, sales of existing single-family homes jumped an unexpected 7% in December from November’s seasonally adjusted annual rate.

In Los Angeles, for example, the annual decline has stayed between 25% and 27% from the time of June, according to the index. In Miami, the annual declines since may have remained in the 28%-to-29% rove over.

"If you buy a abode and rent it thoroughly in these markets, you can wish a positive cash flow just inasmuch as prices are so low," said Mike Larson, a substantive estate analyst with Weiss Research in Jupiter, Fla. "Even though the economy is crummy, more investors are willing to nibble when the price is right."

Other resilient markets were feeling the impact of the economic downturn. Year-over-year declines have been accelerating in Minneapolis, Boston, Chicago, Seattle, Atlanta, Washington, Detroit, San Francisco, and Charlotte, N.C.

In Atlanta, for example, the year-over-year declines increased steadily each month, from 2.12% in November 2007 to 11.25% in November 2008, according to the 20-city index. In Charlotte, the banking capital of the South, close prices hem 5.33% in November 2008. By relative estimate, prices jumped 2.9% in November 2007.

The Charlotte horse-cloth market was relatively stable to the time when the summer because the area had benefited from a population boom and a strong job market. But buyers grew cautious as problems worsened in the financial sector. Charlotte-based Bank of America (BAC) plans to remove up to 42,500 jobs worldwide as a result of mergers with Countrywide Financial and Merrill Lynch. And Wells Fargo (WF) also is expected to divide local jobs as a result of its acquisition of Charlotte-based Wachovia.

"People don’t know how frequent layoffs there will be in Charlotte," said Professor Steven Ott, director of the Center for Real Estate, University of North Carolina at Charlotte. "There’session a lot of uncertainty."

Charlotte appraiser Steven Stone said Charlotte’s problems have worsened inasmuch as November. Home sales were off 40% in December compared to the previous December. And prices are now down 15% to 20% for homes above $600,000 and from a thin to a dense state up to 20% for starter homes, he said.

The financial exigency is the "strength reason Charlotte took the last punch compared with other markets," Stone said.