Home Prices Fell 8.2 Percent in 2008 on Foreclosures

2009 February 24

February 24 2009 - U.S. home prices fell a record 8.2 percent in 2008 as the recession and a surge of foreclosures caused the worst devaluation of real estate since the Great Depression.

The fourth-quarter figure was 3.4 percent lower than the prior quarter, on a seasonally adjusted basis, the Federal Housing Finance Agency said today in a report. The decline is the largest on record, the Washington-based agency said.

Prices fell as banks seized real estate from delinquent borrowers. U.S. President Barack Obama said last week his new $275 billion housing program will help about 9 million homeowners lower monthly payments in a bid to keep new foreclosures in 2009 below last year’s all-time high of 2.7 million.

“As long as home prices are falling, the financial system and the economy will continue to unravel,” Mark Zandi, chief economist at Moody’s Economy.com, said in an interview. “It will cost millions of tax dollars to try to prevent additional foreclosures from coming on the market and gutting prices further, but it will cost millions more if we do nothing.”

Obama’s foreclosure prevention effort is “an absolutely necessary part of the recovery” and will “arrest this very damaging spiral” in home prices, Treasury Secretary Timothy Geithner said last week.

Home Prices Fell 8.2 Percent in 2008 on Foreclosures

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