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U.S. Housing Market Undervalued in Fourth Quarter 2008
In its analysis of housing values for last year’s fourth quarter, IHS Global Insight found that the U.S. housing market was slightly undervalued on the whole following a 9.9% fall in prices from their peak in 2007.
Home prices fell at an annualized rate of 13% during the final four months of 2008, according to the “House Prices in America” study, which was the greatest rate of decline so far in the current housing downturn.
The price contraction continued to be most severe in the Southwest and Southeast, areas of the country that had once been the most over-valued, the study found.
Prices fell in 302 of the 330 metropolitan areas included in the study, or 92% of them.
In the fourth quarter of 2008, only Atlantic City, N.J. met the study’s definition of an extremely overvalued area, compared to 52 metro areas during the peak of overvaluation in the fourth quarter of 2005.
Only the Pacific Northwest, extending into Idaho and Utah, remained overvalued across a wide region in the fourth quarter, the study found.
When the 330 metro areas were weighted by market value, housing was 8.4% undervalued in the fourth quarter, according to the analysis. When weighted by housing units, the nation’s housing stock was 10.2% undervalued.
Statewide average home price declines for 2008 exceeded 20% in Arizona, California, Florida and Nevada, and they dropped more than 10% in Maryland, Michigan, Georgia and Virginia, IHS Global Insight reported.
“We expect prices to decline further through 2009 as consumers remain wary of taking on housing debt in these uncertain economic conditions,” said Jeannine Cataldi, senior economist and manager of IHS Global Insight’s Regional Real Estate Service.
“Markets where the boom was greatest, and the fall the hardest, will be watched carefully for any signals that may indicate a trend towards stability and potential growth,” she said.
“House Prices in America” is a joint effort of IHS Global Insight and The PNC Financial Services Group, Inc.
 Tax Credit Web Site Looks at Opportunity of a Lifetime
Builders and other industry professionals can help spur home sales by referring prospective first-time home buyers to www.federalhousingtaxcredit.com. The NAHB Web site provides detailed information on the $8,000 federal tax credit for first-time home buyers included in the economic stimulus legislation signed into law by President Obama.
Consumers can use the Web site to find information on the tax credit — including a detailed question and answer section. It also includes information about other housing-related and small business measures in the legislation and a number of home-buying resources for consumers.
Spanish Version Also Online
A Spanish version of this increasingly popular Web site is also available to provide detailed information on the tax credit to Spanish-speaking first-time home buyers.
Industry professionals are encouraged to highlight either tax credit Web site when marketing to their potential first-time home buyer market.
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