You’ve Got to Fall Before You Can Pick Yourself Up

The national housing market peaked in 2006, but some local markets peaked before this period, while

others were still on the upswing through 2007. Today, most markets are in decline as a result of the

economic recession, problems in the mortgage markets and a hangover from the subprime mess.

Critical to a recovery is eliminating the perception of the local market as being in decline and crucial to

this change is defining the "bottom" in the market covered by MRIS.

Nationally, the median price peaked in the third quarter of 2005. Since then, it has fallen 23.5%. Over

the last 12 months, the median home price has fallen 15.7%. Thus, 60.4% of the national price decline

took place in the last 12 months ending in June of this year.

Sales have followed suit. After peaking in the third quarter of 2005, the quarterly sales volume declined

34.5%, but only 3.6% in the 12 month period ending in June. The bulk of the decline in sales, 92.9%,

occurred prior to the large price declines of the last 12 months. This pattern makes sense. After years

of a strong sellers’ market, sellers were reluctant to recognize the change in affordability as mortgage

rates began to creep up in the middle of 2005. As financing and demand dried up, sellers were forced to

Locally, the housing market reached its peak price in the second quarter of 2007 with an average price

23.3%. Over the last twelve months the average price has fallen $40,546 which accounts for roughly

Sales are down 76.9% since their peak in the second quarter of 2005 through the second quarter of

adjusted pattern of local decline is over.

Nationally, neither sales nor prices appear to have clearly defined a bottom, yet. When that process is