Did you buy a home in SoCal at the peak of the market? We want to hear from you.
The real estate market just experienced its biggest drop in history, as home prices in the hot real estate market of Southern California fell by 3.6% in one week.
“It’s almost like a recession all over again,” says Michael Sayers, president of the National Association of Realtors.
In a sign of the times, the median home price in the nation’s 17th-largest metropolitan area dropped from $374,000 to $360,000, according to the S&P/Case-Shiller home price index.
The national index is based on prices from the 40 largest housing markets and the largest metro areas in the United States. The index has been showing a steady decline since peaking in August 2006, according to Sayers.
Even more striking, home prices in the most expensive and second-most expensive markets in the nation fell by almost the same percentage, according to Sayers. In the nation’s most expensive markets, such as Seattle, San Francisco and San Jose, home prices fell 3.6%, 2.8% and 2.7%, respectively, in one week. Home prices in the nation’s second-most expensive market, the New York City metro area, fell 2.7% in one week.
The S&P/Case-Shiller index is a leading indicator for home values in the United States. Over six months, a 0.5 percentage-point dip in the index is a sign of a 6.6% drop in home values in the U.S. economy. But it is not a reliable indicator for shorter time periods, says Sayers.
“Home prices can fall in a two-month or three-month interval and be more volatile than the index, but we have not seen a six-month period where prices fell in a big way,” says Sayers.
But he doesn’t have any hard data to prove