Home/Mortgages/Total U.S. Home Values Drop 30 Percent Since Market Peak

December 6, 2011 (Jeff Alan)

The national average home price fell 1.2 percent to $202,000 for transactions completed in September putting U.S. home values more than thirty percent below their market peak value in 2006 according to Lender Processing Services (LPS) Home Price Index (HPI).

The price decline follows a 0.9 percent decline in August and is consistent with the seasonal fall patterns experienced by the housing market since 2009. The average home price was 4.4 percent below last September’s prices and is 1.8 percent below the average price at the beginning of 2011.

The LPS HPI summarizes national home prices by tracking monthly prices in over 13,500 ZIP codes covering 437 Metropolitan Statistical Areas (MSAs).

“Home prices in September were consistent with the seasonal pattern that has been occurring since 2009,” explained Kyle Lundstedt, managing director for LPS Applied Analytics. “Each year, prices have risen in the spring, but revert in autumn to a downward trend that has not only erased the gains, but has led to an average 3.7 percent annual drop in prices to date. The partial data available for October suggests a further approximate decline of 1.1 percent. Partial data from last month proved to be a good indicator for September’s performance: it showed a preliminary 1.1 percent estimated decline, compared to the 1.2 percent as shown by the full-month’s data.”

Average home prices peaked at $282,000 in June 2006 with the most rapid decline in home prices occurring between July 31, 2007, and December, 2009, when prices declined $56,000 from the market’s peak, an annual decline of 13.8 percent. Since that time, the annual rate of decline has slowed to an average of 3.7 percent, with home prices declining about $24,000 during that time.

The total value of U.S. housing inventory covered by the Index stood at $10.6 trillion at the market peak and was valued at $7.56 trillion at the end of September, a decline of 30.2 percent.

All 26 of the largest MSAs posted a monthly decline in September with the largest declines posted in Atlanta (-4.3%) and Los Angeles (-1.8%) followed by five cities that posted declines of 1.4 percent. Last month, none of the MSAs posted a monthly price gain either, but three MSAs (Detroit, Chicago, and Minneapolis) remained virtually unchanged from the previous month.

Since the beginning of the year, 12 of the 26 largest MSAs have either posted an increase in average home prices or remained unchanged with largest price increase posted in Detroit, where prices have increased 8.3 percent, while the largest decline has been in Atlanta, where prices have fallen 18.0 percent since the beginning of the year.

Year-over-year, only four of the 26 MSAs have posted an increase in average home prices led again by Detroit with an increase of 4.8 percent. The largest decline in home prices was also in Atlanta where prices have fallen 21.3 percent in the last year.

Average home prices in four MSA’s, Detroit, Atlanta, Phoenix and Cleveland, are currently 43.0, 26.9, 8.9 and 8.3 percent below January 2000 levels, respectively.

Early, partial data for October’s sales indicates that a likely home price decline of approximately 1.1 percent will be posted for the month.

Tags: average home price, home price index, market peak, MSAs, rapid price decline