Nationally, Home Prices Slide to Q3 2003 Levels

As reported today in the
December 2008 S&P/Case-Shiller Home Price Index (pdf) , national home prices are now back to the levels of late 2003, having fallen 26.7% from their peak in Q2 of 2006. The 10-City Composite dropped 19.2% from a year ago, the largest decline since the inception of the index 21 years ago.

The seven worst performing cities in terms of year-over-year declines continue to be from the Sunbelt, reporting negative returns in excess of 20%. Phoenix was down 34.0%, Las Vegas reported -33.0% and San Francisco fell 31.2%. Denver, Dallas, Cleveland and Boston faired the best in terms of annual declines down 4.0%, 4.3%, 6.1% and 7.0%, respectively.

Eighteen of the 20 metro areas are in double digit declines from their peaks, with half of the MSA’s posting declines of greater than 20% and four of those (Las Vegas, Miami, Phoenix and San Francisco) in excess of 40%.

This is particularly troubling given that under the current plan, those who owe more than 105% of current value on their mortgage do not qualify to receive modification assistance. The government seems to want to help refinance people that don't really need it. The hammer on housing prices has come down and it's simply a matter of how long people can continue making payments while facing a stiff economic headwind and a historically high level of personal debt.