Price Drop

The Case-Schiller Index numbers are in for 1Q 2009, and home prices dropped a staggering 19.1% in America's major metro areas.

"Declines in residential real estate continued at a steady pace into March," said David Blitzer, chairman of the Index Committee at Standard & Poor's in a prepared statement. "All 20 metro areas are still showing negative annual rates of change in average home prices with nine of the metro areas having record annual declines."

The ugly report was somewhat unexpected, according to Mike Larson, a real estate analyst for Weiss Research.

"The market was anticipating better results," he said. "There had been some signs of increased sales in post-bubble markets."

But that sales increase has not translated into higher prices. Bargain hunting - bottom fishing really - for foreclosures and other distressed properties has driven sales volume up while further depressing prices.

In other words, people are buying foreclosed homes at the bottom end, but not at the top. Since high-priced homes have a lot further to fall still, that's knocking down the prices for the entire market in these areas and indeed America as a whole.

Plus, new home starts will continue to depress the market as the supply of homes continues to increase. People are buying dirt-cheap homes...but that's all they are buying.

We still have a long way to go, and another wave of foreclosures to come that will only continue to depress housing prices well into 2010, maybe longer.