Home Price Declines

Home prices fell 8.9% in 2007, the largest decline in the Case-Shiller home price index in 20 years. The index fell 5.4% in the fourth quarter alone. Prices in 17 of 20 major cities fell, with eight cities falling by double-digits. After adjusting for inflation, real home prices were lower in all 20 cities. For the fourth straight month, nominal prices in all 20 Case-Shiller cities were lower than in the previous month. The 20-city index fell 2.1% in December and 9.1% for the year. The original 10-city index fell 2.3% in December and 9.8% for the year.

The biggest annual declines were seen in the former bubble areas in Florida and the Southwest. Home prices in Miami were down 17.5% in the past year, while prices fell 15.3% in Phoenix and Las Vegas. Phoenix had the largest decline in December, falling 3.5%, followed by San Diego at 3.4% (down 15% for the year) and San Francisco at 3.2% (down 10.8% for the year). But even in non-bubble cities, such as Atlanta, Cleveland, Chicago, Dallas, Detroit and Minneapolis, prices are dropping. Detroit, down 13.6%; Minneapolis, down 8%; Cleveland, down 6.3%; Chicago, down 4.5%; Atlanta, down 3.4%; Dallas, down 2.4%. Other major cities: Los Angeles, down 13.7%; Washington, down 9.4%; New York, down 5.6%; Boston, down 3.4%.