Filed Under:  U.S. & World

Case-Shiller: Home Prices Still Dropping in 2010

Contributed by on February 21, 2011 at 4:46 pm

Although the economy has shown indications recently of regaining strength, the housing market has yet to show any signs of life.  In fact, in the latest measure of national home prices it was revealed that nationwide values dropped by more than 4% during the last quarter of 2010 when compared to the same period from one year earlier.

The most widely recognized measure of home pricing health, the Case-Shiller index, showed that housing prices will likely continue to drift lower in 2011 by upwards of 25% in some markets.

Statistically, 18 of the 20 cities surveyed showed losses for 2010.  The only major markets which managed to show gains included Washington, DC and San Diego, California which rose by 4% and approximately 2%, respectively.  The worst performer was Detroit, Michigan which fell by approximately 9%.

One of the primary reasons cited for the projected downward trend relates to the anticipated smaller role that Fannie Mae and Freddie Mac will play in the housing market.  The government is focused on reducing the number of loans that the agencies guarantee.  Between them, the two agencies back about two thirds of all mortgages issued.  If this guaranteed financing goes away, private lenders will have to step in and undoubtedly will charge higher interest rates.

Market watchers expect this outcome to further depress housing values.