S&P Case-Shiller Home-Price Index Down 18.5% in December 2008 Year over Year

According to a blooimberg article U.S. Existing Home Sales, Prices Slumped in January the S&P Case Shiller Home Price Index is

The S&P/Case-Shiller home-price index of 20 metropolitan cities was down 18.5 percent in December from a year earlier, a record decline, the group said yesterday.

The take on foreclosures and housing prices

Prices are likely to keep falling. Home foreclosures were up 17.8 percent in January from a year earlier, according to RealtyTrac Inc., an Irvine, California-based seller of default data. A total of 274,399 properties got a default or auction notice or were seized by banks, the 10th straight month that foreclosures topped 250,000.

This is not a good sign for those who are looking to buy a new home or upgrade to a larger home at the current time. Most people who can afford to wait will wait out the declines because they don’t want to purchase a home that keeps dropping in value.

The thinking is why should I put up my money to lose more value. So they’ll wait, and foreclosures and houses that are on the market will continue to decline for the near future.

The competition from distressed sales is hurting builders. Standard Pacific Corp., based in Irvine, California, reported its ninth straight quarterly loss on Feb. 13. New home deliveries fell 47 percent, backlogs declined 50 percent and the cancellation rate was 33 percent, the company said.

It makes sense for consumers to try to get the best deals. Why would I spend $5 on a widget when it’ll be selling tomorrow for $2.50? I’ll wait until it drops to $2.50 and save my $2.50 for savings or something else.

For Houses, some people like new houses. Everyone wants a good deal so whether they can find it in distressed properties or with new homes from a builder; there’s just more supply and the price is continuing to trend lower.

The rise in unemployment is a bit concerning:

Mounting foreclosures triggered a credit crisis which in turn has deepened the U.S. recession that began in December 2007. Economists surveyed by Bloomberg this month projected the economy will continue to contract at least through the first half of this year and that unemployment will rise to a 25-year high of 8.8 percent by the end of 2009.

25 year high. so we’d have to go back to 1974 to have a similar unemployment rate of 8.8 percent. Just out of curiosity I wanted to see what kind of news we had in 1974.

According to 1970’s Flashback these were the

News headlines:

• Nixon Rejects Ervin Subpoena
• Heirs Patty Hearst Is Kidnapped By Symbionese Liberation Army
• House votes 410-4 To Investigate The President
• Solzenitsyn Is Deported From Russia
• Grand Jury Indicts presidential Aids Halderman, Erlichman, Colson
• India Announces It Has A-bomb
• Juan Peron Dies Wife Isabel Takes Over
• Nixon Resigns…Ford Sworn In As President
• Ford Gives Nixon Absolute Pardon

In the News:

• 55 mile-per hour speed limit is inacted
• OPEC oil embargo ends
• Nixon agrees to pay 432,000 in back taxes
• Nelson Rockefeller is appointed Vice President as Ford becomes President
• Died, Jack Benny, Dizzy Dean, Duke Ellington,Chet Huntley, Ed Sullivan
• Muhammad Ali using “Rope a Dope” knocks out George Foreman in 8 th
• The “String” Bikini is in fashion
• Because of gasoline shortage, daylight savings time is observed all year to save fuel
• Lt. William Calley convicted of his part in My Lai massacre is paroled

It sounded like tumultuous times and times of change as we are in now.

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