Home Prices Drop to Lowest Level Since 2002

A new home price index revealed home prices have dropped to the lowest level seen since the middle of 2002. The index, released by S&P Case Shiller on Tuesday, found that prices dropped 4.2 percent from the prior three months, falling below prices seen during the 2009 housing bust bottom.

Prices Down 32 Percent from 2006

The index has seen several lows over three-quarters of the past year. According to S&P, the home price levels in the first quarter of 2011 are 5.1 percent lower than a year ago. This is the third straight quarterly drop for the index. Even more alarming is that national prices are down 32.7 percent from their peak set five years ago.

A report from Capital Clear noted in early May that home prices had officially double dipped. The S&P Case-Shiller report, which covers 80 percent of the housing market, confirmed the report, stating that prices across much of the nation had indeed dropped to an industry low.

2009 Rebound Brought False Hope

David Blitzer, spokesman for Standard and Poor’s, noted in a CNN Money article that the nation may have been given a bit of false hope after home prices rebounded periodically in 2009 and 2010. The industry was reeling from the effects of the homebuyer tax credit, which encouraged many prospective homeowners to get out and buy.

However, Blitzer noted, after the credit expired in April 2010, the industry slumped once again. Not only were consumers no longer interested in buying homes, which resulted in a drop in prices, but the foreclosure scandal of late 2010 resulted in more empty homes and continued drops in prices.

Blitzer stated that “there has been no recovery or even stabilization in home prices during or after the recent recession.” Unfortunately, no sign of recovery is expected in the near future.