Along with yesterday’s headline that houses in the nation’s 20 largest cities fell an average of 18 percent year-over-year in October was the news that single-family homes in the New York metropolitan area declined a more modest 7.5 percent. (The 20-city index has now fallen more than 23 percent since its July 2006 peak.) Reason to cheer? Not exactly, says the Wall Street Journal:

Markets where price declines have been slightest may be in worse shape, because prices still have further to fall before enough buyers step in to bring housing activity to normal. Meanwhile, heavy foreclosure activity in hard-hit areas like Phoenix, Las Vegas and San Diego are bringing prices into equilibrium. Those cities may be closer to a turnaround…In the language of Wall Street, with asking prices not dropping to levels where bidders will pick them, the market isn’t “clearing.”

The Journal article goes on to say that New York City’s slower decline resembles past patterns: It took three years between 1988 and 1991 for prices to fall just 15 percent. This go-round, “the price decline may be far more severe,” the article predicts. “Right now, people are still living on last year’s bonus,” says Barclays Capital economist Ethan Harris, who is based in New York. “You can sort of feel the local economy on the edge of a cliff.”
New York, Boston Prices Expected to Fall Further [WSJ - Sub]
Home Prices Fell at Their Sharpest Pace in October [NY Times]
Local Home Prices Fall 7.5% [NY Post]