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The National Association of Realtor’s new fourth-quarter 2007 housing report, which shows median home prices dropping in every region of the nation and home sales declining in all but a couple states, is more than just another depressing snapshot. It is the group’s first quarterly report that reflects the nationwide credit-tightening brought on by the subprime mortgage mess.
The depth of the crisis began to unfold only in August of last year after which banks tightened lending standards for subprime borrowers, reducing an already shrinking pool of potential buyers.
The Feb. 14 report indicates that the downturn is spreading across the country. States with previously resilient markets, such as Utah, Oregon, Washington and North Dakota, started flagging at the end of last year.
In Utah, where the red-hot job market and population growth has kept the housing market strong, home sales dropped 34% in the fourth quarter of 2007 compared to the same period last year. In Salt Lake City, where home prices jumped an astounding 14.1% in the third quarter of 2007, prices rose just 2.5% in the fourth quarter to $229,100 compared to the same period a year earlier.
In Spokane, Wash., home prices increased just 2.6% in the fourth quarter of 2007 compared to the fourth quarter of 2006. Spokane home prices leaped 8.2% in the third quarter of 2007 from the same period in 2006.
South Dakota is bucking the trend. Home sales in South Dakota rose 8.9% in the fourth quarter from a year earlier. And in Sioux Falls, S.D. prices climbed 6.5% from the fourth quarter of 2006, an improvement over the third quarter pace. Sioux Falls home prices increased 5.1% in the third quarter compared to the same period a year earlier.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.