U.S. home prices fell 3.2% in the second quarter compared with a year earlier, Standard & Poor’s reported Tuesday.
It’s the largest decline ever in the 20-year history of the Case-Shiller home price index.
A year ago, home prices were rising at a 7.5% pace nationally.
… Meanwhile, prices fell 3.5% in the past year in 20 major cities and 4.1% in 10 major cities.
It’s only the beginning. The psychology hasn’t set in yet. What happens next is sellers hear this news and start to realize that the game is up. So they’ll start to accept that they have to lower prices if they are going to sell. And this doesn’t even take into account that foreclosures are going to start serious price drops soon.
I’mnot trying to be doom and gloom here, I’m just describing what has to happen when we have seen the kind of price bubble we have seen. Prices have to revert to the mean.