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Single Family Home Prices Fall for First Time Since 1994

Most Overvalued Markets Seeing Steepest Price Drops

WALTHAM, Mass., Dec. 6 /PRNewswire/ -- Global Insight, the world's leading company for economic and financial analysis and forecasting, today released the third quarter 2007 update of House Prices in America, the U.S. housing-valuation analysis, showing that prices for single-family homes declined for the first time since 1994, with California, Florida and Michigan accounting for the steepest losses. Prices fell at a 1% annualized rate during the quarter, though they were still up 1.8% year-over-year.

Price drops during the period were pervasive, falling in 171 of 330 metro areas in the survey. Among the 171 with quarter-to-quarter declines, 98 also recorded year-over-year declines and 18 of them saw declines of 10% or more. Nine of the metro areas were in California, and six in Florida. Michigan and Nevada were also affected. In all, prices in 48 metro areas in these four states have declined by more than 5% in the past year. The declines in California, Florida and Michigan were the most severe, accounting for all but one of the 30 worst performing metro areas in the U.S.

The steepest price declines in California in the third quarter compared to the same period in 2006 were in Merced (16.4%) and Santa Barbara (15.1%), which has now declined by 18.8% from its peak in 2005. The largest declines in Florida were in Punta Gorda (14%) and Cape Coral - Fort Myers (12%).

The price declines have reduced the number of extremely overvalued housing markets in the nation to 38 in the third quarter, compared to 63 a year ago, representing 11% of all single family homes and 21% of related real estate asset value. The most overvalued market is Bend, OR at 70%, up 1.9 percentage points from the second quarter. Bend was among 117 metro areas that saw their levels of overvaluation increase.

While price declines in all of the California metro areas have reduced their level of overvaluation, extreme overvaluation remains the norm in each of the Pacific Coast states, and remains extensive throughout Florida and in the Greater Washington, DC metropolitan area.

James Diffley, Group Managing Director of Global Insight's Regional Services Group, said, "The current housing recession, turmoil in financial markets, tightening of credit standards and the large inventory of homes for sale will continue to exert downward pressure on prices."

Jeannine Cataldi, Senior Economist and Manager of the Global Insight Regional Real Estate Service, added that, "Indeed, the price declines thus far can be seen as relatively mild given the dramatic fall in home sales. But the evidence indicates that prices are slowly reverting to their historic relationship to economic fundamentals."

The House Prices in America study, a joint effort by Global Insight and National City Corporation, examines the top 330 U.S. real estate markets, representing 92% of the national single-family housing market, to determine what home prices should be, accounting for differences in population density, relative income levels, interest rates, and historically observed market premiums or discounts. Markets with valuation premiums above 33% were deemed at risk for price corrections based on the typical degree of overvaluation that preceded the 79 known local market price declines observed since 1985.

House Prices in America combines a statistical model originally developed at National City Corporation (http://www.nationalcity.com/housevaluation) with data largely developed at Global Insight. More information on Global Insight's housing valuation analysis is available at http://www.globalinsight.com/housingvaluation.

About Global Insight

Global Insight, Inc. (http://www.globalinsight.com/) is a privately held company that brought together the two most respected economic information companies in the world, DRI and WEFA. Global Insight provides the most comprehensive economic and financial information available on countries, regions and industries, using a unique combination of expertise, models, data and software within a common analytical framework to support planning and decision-making. Through the world's first same-day analysis and risk assessment service, Global Insight provides immediate insightful analysis of market conditions and key events around the world, covering economic, political, and operational factors. The company has over 3,800 clients in industry, finance, and government with revenues in excess of $95 million, over 675 employees and 25 offices in 14 countries covering North and South America, Europe, Africa, the Middle East, and Asia.

About National City Corporation

National City Corporation (NYSE:NCC) , headquartered in Cleveland, Ohio, is one of the nation's largest financial holding companies. The company operates through an extensive banking network primarily in Ohio, Illinois, Indiana, Kentucky, Michigan, Missouri, Pennsylvania and Florida, and also serves customers in selected markets nationally. Its core businesses include commercial and retail banking, mortgage financing and servicing, consumer finance and asset management. For more information about National City, visit the company's Web site at http://www.nationalcity.com/.

Source: Global Insight

Web site: http://www.globalinsight.com/
http://www.globalinsight.com/housingvaluation
http://www.nationalcity.com/
http://www.nationalcity.com/housevaluation

New Poll Finds Americans Skeptical over Proposals to Rescue Subprime Borrowers

Alexandria, VA · December 5, 2007 /PRNewswire/ — As the Bush administration huddles with major lenders to finalize a relief plan for subprime borrowers, new results today from a survey conducted by Harris Interactive® on behalf of the National Taxpayers Union (NTU) warn against the government going too far. Almost half (48%) of U.S. adults aged 18 and older think a federal bailout of the subprime market would help either lenders who issue subprime mortgages or Wall Street banks who profit from subprime mortgages; in contrast, roughly a quarter (26%) believe homeowners who hold subprime mortgages would benefit most.

"When it comes to rescuing the subprime mortgage market, Americans are skeptical not only of who will benefit, but who will be left holding the bag," said NTU Vice President for Policy & Communications Pete Sepp. "While other surveys have shown serious public concerns over rising mortgage defaults, this poll demonstrates Americans have equally serious reservations over government involvement in the solution."

From the S&L crisis of the 1980s through the recent scandals at Fannie Mae and Freddie Mac, NTU has opposed government schemes that would put taxpayers on the hook for financial institutions' missteps. Recently Congress and the Bush administration have crafted proposals to ease subprime woes, such as allowing the federal government to buy shaky loans and creating a "superfund" that states could use to bail out borrowers or lenders. NTU, which opposes such radical steps, commissioned the survey in order to gauge public attitudes toward subprime rescue packages. Among the findings:

• When asked which statement most closely reflects their views on plans allowing federal agencies to "increase the size of the loans they can insure and purchase, and to reduce down-payment requirements," 66% of respondents agreed that "these proposals are nothing more than a taxpayer-funded bailout of banks and lenders that provided and profited from these risky loans." Thirty-four percent believed "a taxpayer-backed refinance program is necessary to avoid an increase in foreclosures that could reduce home values across the country."
• Sixty percent of respondents said taxpayers would be most negatively affected if the government were to "bail out the subprime mortgage market." Much smaller numbers felt that "homeowners who hold subprime mortgages" (5%), "lenders who issue subprime mortgages" (5%), or "Wall Street banks who profit from subprime mortgages" (5%) would be most negatively affected.
• When asked who would benefit most from a bailout, 30% of respondents identified lenders who issue subprime mortgages, 18% said Wall Street banks who profit from subprime mortgages, while just 26% cited homeowners as the main beneficiaries.
• Participants were then asked about proposals for taxpayer funding "to subsidize mortgage payments, or subsidize the cost of refinancing subprime loans." Forty-five percent indicated they strongly or somewhat opposed such a plan, while only 29% indicated they strongly/somewhat supported it, and 12% indicated they didn't know or were not sure.

"The low levels of trust in government reported in other polls, along with the results of our poll, seem to suggest that policymakers may want to minimize the government's role in any rescue packages being crafted with the lending industry," Sepp concluded.

Harris Interactive® fielded the study on behalf of the National Taxpayers Union from November 26-28, 2007 via its QuickQuery^SM online omnibus service among 2,058 U.S. adults aged 18 years and older. No estimates of theoretical sampling error can be calculated. Note: a full methodology,* along with a graphic presentation of the poll results, is available at www.ntu.org or www.subprimenewsroom.com.

*Harris Interactive fielded the study on behalf of the National Taxpayers Union from November 26-28, 2007 via its QuickQuerySM online omnibus service among 2,058 U.S. adults aged 18 years and older. Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was also used to adjust for respondents' propensity to be online.

All sample surveys and polls, whether or not they use probability sampling, are subject to multiple sources of error which are most often not possible to quantify or estimate, including sampling error, coverage error, error associated with nonresponse, error associated with question wording and response options, and post-survey weighting and adjustments. Therefore, Harris Interactive avoids the words "margin of error" as they are misleading. All that can be calculated are different possible sampling errors with different probabilities for pure, unweighted, random samples with 100% response rates. These are only theoretical because no published polls come close to this ideal.

Respondents for this survey were selected from among those who have agreed to participate in Harris Interactive surveys. The data have been weighted to reflect the composition of the U.S. adult population. Because the sample is based on those who agreed to be invited to participate in the Harris Interactive online research panel, no estimates of theoretical sampling error can be calculated.

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