January 12, 2011
This fact would have been worth mentioning in a USA Today piece that discussed Core Logic’s data showing a sharp price decline in November. The piece included projections from Global Insights and Moody’s Analytics that house prices would decline by a further 5.0 percent over the course of 2011.
The most recent data show house prices dropping at a rate of close to 1.0 percent a month. Prices in the bottom third of the housing market are falling at 2 or 3 times this rate in several cities according to the Case-Shiller data. This suggests that the plunge is being driven by the end of the first-time buyers tax credit, since the bottom tier would be the portion of the market most affected by the credit.
It is reasonable to think that the rapid price declines in the bottom tier will be a drag on prices in the middle and top tier, since the sellers of bottom tier homes are buyers of higher end homes. This would imply that price declines are more likely to accelerate in the immediate future rather than slow.
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