Global Insight has released its quarterly report on home prices and housing market valuations, which found that prices posted the weakest year-over-year gain since 1995 during the second quarter. Prices appreciated just 2.6 percent nationally in the yearly comparison, according to the report. Click here to request access to the full report.
Price declines were broadly dispersed throughout the country, though California, Nevada, Florida, New England, New York—all areas that had posted the highest levels of overvaluation—and the industrial Midwest—notable for sluggish economies and high foreclosure rates—showed widespread price declines. Michigan hosts several metro areas, including Detroit, that now qualify as fully fledged corrections; five metros in California have seen double-digit corrections. In all, 80 of the 330 metro areas in the analysis experienced price declines from the first quarter. Those 80 metro areas account for 22% of the nation's single-family housing units. On a year-over-year basis, 93 metro areas had lower prices in the second quarter. More than half of them were in California, Florida, and Michigan.
Most of the report covers ground well-known to HW readers. The good news here, however, is that those markets identified by the study as "overvalued" decreased to 51 metro areas in the first quarter, down from 59 metro area markets (revised) in fourth-quarter 2006. A year ago, 79 markets were overvalued by the study's measure. Dallas, Texas continued to sit in the pole position as the most undervalued market in the United States. Nonetheless, the study's authors said they expect downward pressure on prices to intensify in coming quarters, citing what was characterized in the report as a "housing recession."