Posted on Wednesday, March 24, 2010
Home prices in extremely overvalued U.S. metropolitan areas declined nearly 37 percent on average between 2005, the peak of the real estate bubble, and the fourth quarter 2009 when prices stabilized, according to the House Prices in America update released by IHS Global Insight Friday.
At the peak of the bubble, 137 metro areas of the 330 in the study were either extremely or significantly overvalued. By the end of 2009, there were no extremely overvalued metro areas.
For the country as a whole, IHS says the housing market is now slightly undervalued. When weighted by market value, the nation is 8.9 percent undervalued; 10.3 percent undervalued when weighted by housing units.
In more than half of the 52 U.S. housing markets found by IHS to be extremely overvalued in 2005, prices appreciated more than 90 percent from when the bubble began in early 2002. The metro areas of California and Florida dominated the extremely overvalued list at the end of 2005.
Overall, 10 metro areas have seen prices decline by more than 50 percent from their peaks, led by Merced, California, down 64 percent, and including Las Vegas, down 58 percent. There are now 31 metro areas with declines greater than 40 percent from their peaks.
Prices in many of the hardest-hit markets are still on a slippery downward slope.
The largest monthly decline occurred in San Francisco with prices falling 4.4 percent during the month and down 10.9 percent for the most recent three-month period. Miami experienced the smallest decline with prices decreasing by 0.2 percent.
This correlates the continued declines with inflated inventories and drawn out timelines to move properties once they’ve hit the market.
Listed property inventory jumped in 24 of 26 markets tracked by the company in February. Nationally inventory is 10 percent lower than last year at this time, though climbing rapidly going into the spring.
All markets had a median days-on-market of 100 or more in February. Chicago edged out Miami as the market experiencing the slowest turnover with a median of 220 days-on-market.