U.S. home prices fall at record rate

June 24, 2008 8:32:33 PM PDT
There is more bad news for the Bay Area housing market. This time, it's coming from a leading research company.

Standard and Poor's latest report reveals that home prices in the Bay Area, and across the country, have plunged to 2004 levels.

The hardest hit is Las Vegas, with prices dropping nearly 27 percent from April of last year to April 2008 and the Bay Area is not far behind at 22 percent.

Builders throughout the Bay Area are having to reach into their own pockets to try and compete with what's happening in the larger markets, where foreclosures and short sales are driving prices straight down.

A cape cod style home in Livermore, nearly 4,200 square feet with five bedrooms and five baths is in escrow for less than $1 million and Colleen McKean is the listing agent.

"The price on this started at $1.2M. We quickly moved to a 1.1M, when the models were selling for 1.245. After about a week, we went to a million-fifty, got a couple offers and it's at the bank right now. "

The current offer is about $400,000 less than the owner paid for the house just two years ago.

According to Standard and Poor's, home prices in 20 U.S. cities fell 15 percent in April, compared with last year. In the bay area, that number is 22 percent.

"Everything is down in the San Francisco area, but from the peak to the current, the lower priced homes are down about a third, the higher priced homes are down about 10 percent," says David Blitzer of Standard and Poor's.

"Right now in Livermore, there's 454 homes on the market, and almost 30 percent of those are short sales or bank-owned," says McKean.

New home builders in the Bay Area are responding to the price plunge by offering a host of incentives, just to get prospective buyers in the door.

Scott Tiernan speaks for the builders who created the huge Windemere community in San Ramon.

"Mainly they're talking about a price reduction, they're talking about interest rate buy downs and several other things, help with closing costs. Some builders will put enough in there toward the sale of the house to bring that mortgage payment down so it's affordable."

While some experts think the market is near its bottom, others believe at least for California, the worst is yet to come.

The Standard and Poor's release shows that there may be gives hope to some major metropolitan markets where the prices improved from March into this year, but unfortunately, it's not the case here in the Bay Area.

Standard and Poor's home prices: click here


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