Valley home price drop leads nation, index says

October 28, 2008 - 1:05PM

Tony Natale, Tribune

Homes in the Valley suffered the greatest drop in prices during the past year among 20 major cities, according to the Standard & Poor’s Case Shiller Home Price index released Tuesday.

Prices in the metro area plummeted 30.7 percent from August 2007 to the same month this year, while the sale of homes in Las Vegas plunged 30.6 percent and Miami sale prices sank 28.1 percent, the index reported.

While they also had price drops, the cities that held up the best according to the survey were Dallas, which saw a decrease of 2.7 percent, Charlotte, N.C., down 2.8 percent and Boston, 4.7 percent.

No city showed a price gain during the 12 months, according to the index, a study that is closely watched by the real estate industry, particularly investors. The index compares the sale prices of the same homes each year to determine price trends.

Besides a 20-city study, the index also compares and lists home sale prices for a 10-city market. Prices in the 20-city index have dropped more than 20 percent since peaking in July, 2006. The 10-city index has fallen nearly 22 percent since its peak in June, 2006.

For the fifth straight month, no city in the 20-city index saw annual price gains in August.

“I’m not surprised by any of the data,” said Malcolm MacEwen, president and chief operating officer for Coldwell Banker Residential Brokerage in Arizona.

“We’re falling down the other side of the cliff,” he said, referring to the steady rise in residential selling prices that began in 1995 and reached its peak in 2005, then began to fall when one of every four homes in Maricopa County were sold by homeowners to investors.

MacEwen added: “Metropolitan Phoenix between 1995 and 2005 was one of the fastest growing areas of appreciation of selling prices in the country. Real estate is a cyclical thing. It’s up, then down.”

Jay Butler, director of the Arizona Real Estate Center at Arizona State University, said he wasn’t surprised by the report, either.

“It (index) confirms what we already know,” said Butler. “The drop in selling prices is being driven by the growing number of foreclosures, and the economy.”

Overall, the 20-city index recorded a record year-over-year decline of 16.6 percent with a 1 percent fall in August, the largest drop since the index’s started in 2000.

In August, San Francisco saw the biggest price declines, down 3.5 percent, the Valley dropped 2.9 percent and Las Vegas, down 2.4 percent. Only two cities showed gains in August, Cleveland’s prices rose 1.1 percent and Boston inched up 0.1 percent.

“The downturn in residential real estate prices continued, with very few bright spots in the data,” said David M. Blitzer, chairman of the index committee at Standard & Poor’s.

The Associated Press contributed to this report.