A key index showed Tuesday that housing prices tumbled 15.8 percent in the D.C. area between July 2007 and July 2008, a dramatic decline that is slowing in pace but shows no signs of reversing.
Nationally, the Standard & Poor’s/Case-Shiller index, which evaluates housing prices in 20 major cities, registered a record 16.3 percent decline.
“We’re all giving back some of this ill-gained wealth,” said Stephen Fuller, director of the George Mason University Center for Regional Analysis.
“Metro areas that typically had a very strong economy during the last five years, like we did, had very big price increases in housing,” he said. “It really was good here, and we’re giving back 16 percent.”
While the index shows that Washington area prices have been dropping 1 percent every month since April, that is half the rate from earlier in the year — a positive sign, experts said.
But Fuller said the region should still brace for what probably will be another year of price drops.
“We’re going to give back some more, especially in the suburbs,” he said. “I don’t think the price adjustment is complete yet.”
The recovery of the housing market has been hindered by turmoil in the financial markets that has made mortgages scarce and, over the past week, more expensive.
A Bush administration proposal to buy $700 billion worth of troubled mortgages — a move aimed at bolstering the credit markets — failed Monday in the House of Representatives.
Lawrence Yun, chief economist at the National Association of Realtors, said mortgage rates still are low despite recent increases, but that the passage of a federal rescue package is critical to keeping them stable.
“I’m not too concerned about the mortgage rates today,” Yun said. “But I’m afraid that one negative surprise in the market and the financial liquidity will freeze, and it really hammers the economy backwards.”
