Dive Brief:
- Prices of nearly half of the single-family homes in two of the nation's biggest metro areas dropped in June, the Weiss Residential Index found.
- Values of 45% of single-family homes in the greater metropolitan areas of New York and Washington, DC, fell by at least 2% between June 2014 and June 2015.
- Between June 2013 and June 2014, 20% of houses in the New York area — excluding Manhattan, as the index only measures single-family houses — lost value. During that same time period, only 15% of Washington metro region homes saw values fall.
Dive Insight:
The dropping prices — which also occurred in Los Angeles, Phoenix, Miami and Chicago — could signal that homebuyers are fed up with unattainable price tags and refusing to pay such high amounts, leaving sellers no choice but to lower their asking prices.
Steadily climbing home prices are considered to be a factor hindering stronger growth in the housing market, as they are keeping potential buyers stuck as renters.
Chris Whalen, senior managing director at Kroll Bond Rating Agency Inc. and an advisor to Weiss, told Bloomberg: "What happens in any bull asset bubble such as what we've seen is you run out of buyers... It's hard to get deals done if the bottom third can't get a mortgage."
Allan Weiss, co-founder of the Case-Shiller home price index and founder of Weiss Residential Research, said the report is an important deviation from the constant news that average home prices are rising.
If builders are setting the prices of new homes based only on increasing prices, they might be overestimating the value of their properties. "If you are in a market where 60 percent of houses are rising, you have a 40 percent chance of misunderstanding what's going on with your house," Weiss said.
