By: Dennis Norman
Yesterday Standard & Poor’s released its S&P/Case-Shiller report for 2008 which shows record price declines for the year.
The S&P/Case-Shiller report shows that nationally home prices dropped 18.2% in the 4th quarter of 2008 versus the 4th quarter of 2007 which represents the largest drop in the 21 year history of the report.
The report gos on to state that “as of December 2008, average home prices across the United States are at similar levels to what they were in the third quarter of 2003. From the peak in the second quarter of 2006, average home prices are down 26.7%.”
This is sobering news for homeowners but unfortunately is reality. We again need to be reminded that a home is to be considered a long-term investment…during the “boom” homes were being “day traded” but now we are back to the basics. You don’t buy a home to “flip” for a fat profit a couple of months later, you buy a home to live in, raise your family and build equity by paying down your mortgage and your home appreciating over time.
If we stick to the basics and don’t refi every time we build a little equity up then I think we’ll find we have the equity in our homes to weather the storm. Obviously there are people that are being burned in this market through no fault of their own…a job caused them to move and buy a home during the boom and now a transfer or job loss is making them sell during the downturn which is painful. For those that can wait it out they will no doubt fare better.
As is often the case, one persons sorrow is another’s joy…For people looking to buy a home, particularly first-time buyers that can take advantage of the tax credits offered in the stimulus package, homes are very affordable right now in basically all markets and interest rates are at historic lows….
Related posts:
- Home prices down by record 19% in 20 cities
- Report Shows U.S. Home Prices Hit Record Low in First Quarter; "No relief in sight"
- Home Prices on upswing according to Case-Shiller home price indices
- Report confirms home prices still falling; headed toward double-dip
- Case-Shiller issues disappointing report on home prices