|
|
 |
 |
|
| |
Nation's Housing Market Undervalued, With Few Exceptions
House Price Depreciation Accelerates Rapidly in Fourth Quarter
|
LEXINGTON, MA (April 20, 2009) — IHS Global Insight, the world's leading company for economic and financial analysis and forecasting, today released the fourth-quarter 2008 update of the U.S. housing valuation analysis, House Prices in America, showing that for the nation as a whole, the U.S. housing market is slightly undervalued and that prices have fallen 9.9% from their 2007 peak.
Nationally, prices fell by 13% at an annualized rate and dropped in 92% of the nation's metro areas - 302 of 330. The rate of decline in the quarter was the greatest in the current housing cycle, the study said, and the rates of decline have exceeded the fastest appreciation rates of the bubble years of 2004 and 2005. Price contraction continues to be most severe in the Southwest and Southeast, areas of the country that had once been the most over-valued.
Extreme overvaluation was essentially nonexistent. Only Atlantic City, NJ, met that definition, compared with 52 metro areas during the peak of overvaluation in the fourth quarter 2005. Only the Pacific Northwest, extending into Idaho and Utah, remained overvalued across a wide region.
When the 330 metro areas were weighted by market value, the U.S. was 8.4% undervalued; when weighted by housing units, the nation was 10.2% undervalued.
Statewide average home price declines for 2008 exceeded 20% in the four so-called "sand" states - Arizona, California, Florida and Nevada - and exceeded 10% in Maryland, Michigan, Georgia, and Virginia. Detroit, hit hard by the problems of the domestic auto industry, joined 40 sand state metros with declines for the year greater than 20%.
Prices in five metros in California's Central Valley have fallen to less than half their peaks this decade; 38 other metros have seen prices fall more than 30%. In all, 119 metros, more than one third of the total, experienced price declines of more than 10%.
The steep price declines in the quarter coincided with the deepening recession and the Wall Street market tumble. In addition to facing a heavy overhang of unsold inventory and tight mortgage credit conditions, home prices were propelled further downward by collapsing consumer confidence and job losses totaling nearly two million in the quarter, the study said.
Jeannine Cataldi, senior economist and manager of IHS Global Insight's Regional Real Estate Service, said: "We expect prices to decline further through 2009 as consumers remain wary of taking on housing debt in these uncertain economic conditions. Markets where the boom was greatest, and the fall the hardest, will be watched carefully for any signals that may indicate a trend towards stability and potential growth."
James Diffley, group managing director of IHS Global Insight's Regional Services Group, said: "What is most worrisome about these sharp declines, and the general economic deterioration as 2008 ended, is that there is no sign of a bottom yet."
House Prices in America, a joint effort by IHS Global Insight and The PNC Financial Services Group, Inc. (NYSE:PNC) examines the top 330 U.S. real estate markets, representing 78% of all existing housing units and 91% of all related real estate value to determine what house prices should be, accounting for differences in population density, relative income levels, and historically observed market premiums or discounts. Markets with valuation premiums above 35% were deemed at risk for price corrections based on the typical degree of overvaluation that preceded the 79 known local price declines observed since 1985.
House Prices in America combines a statistical model owned by PNC with data largely developed at IHS Global Insight. More information on IHS Global Insight's housing valuation analysis is available at www.ihsglobalinsight.com/housingvaluation.
Contacts:
James Diffley
+1 610 490 2642
james.diffley@ihsglobalinsight.com
Jeannine Cataldi
+1 610 490 2650
jeannine.cataldi@ihsglobalinsight.com
Jim Dorsey
+1 781 301 9069
jim.dorsey@ihsglobalinsight.com
IHS Press Desk
+1 303 305 8021
press@ihs.com
About IHS Global Insight (www.ihsglobalinsight.com)
IHS Global Insight provides the most comprehensive economic and financial information available on countries, regions, and industries, using a unique combination of expertise, models, data, and software within a common analytical framework to support planning and decision making. IHS Global Insight founded the modern economic forecasting industry more than 40 years ago, and today the company is recognized as the most consistently accurate economic forecasting company in the world. Through the world's first same-day analysis and risk assessment service, IHS Global Insight provides immediate insightful analysis of market conditions and key events around the world, covering economic, political, and operational factors. IHS (NYSE: IHS) is a leading global source of critical information and insight, dedicated to providing the most complete and trusted data and expertise. IHS product and service solutions span four areas of information that encompass the most important concerns facing global business today: Energy, Product Lifecycle, Security and Environment. By focusing on customers first, IHS enables innovative and successful decision-making for customers ranging from governments and multinational companies to smaller companies and technical professionals in more than 180 countries. IHS is celebrating its 50th anniversary in 2009 and employs approximately 3,800 people in 20 countries.
IHS is a registered trademark of IHS Inc. All other company and product names may be trademarks of their respective owners. Copyright © 2009 IHS Inc. All rights reserved.
« Back to Press Room
|
|
|
|
|
|
