House prices: still free fallin'

The volume of house sales is looking a little more robust these days, but the prices they sell at continue to plummet.  In most metropolitan areas, home prices are down more than 10% from last year.

Like most renters who hope to buy, I'm rooting for a continued fall, at least in the DC area.  (Sorry, homeowners).  For people like me in other cities, a new report from Deutsche Bank provides some reason for pessimism about the economy, but optimism about their personal prospects for homeownership:  they rate overvalued cities, and are looking for price drops from 20% in San Luis Obispo all the way to 47% in New York City.

This actually won't hurt New York as badly as it sounds; only 30% of people there own their own homes, and property taxes aren't nearly as vital to the local tax base as they are in most places.  Indeed, it might slightly ease New York's notoriously tight vacancy rate--unless the legislature gets in there and rolls back stabilization decontrol, as it currently seems to be planning.  Unlike places like Florida, where the real estate market actually drives much local economic development, the price drops will be more a symptom of New York's decline than a likely cause.  

Still, 30% of New Yorkers is a lot of people.  And a fair number of them probably need to sell their largest asset so that they can get the heck out of New York, and the finance industry, and start over with a more sustainable life.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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