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Home prices hit 2002 levels – USATODAY.com

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They were 5.1% lower in the first quarter than in the same period last year and fell 4.2% from the previous quarter, according to the Standard & Poor’s/Case-Shiller Home Price index released Tuesday.

Millions of U.S. homes are in foreclosure or headed there, which will depress prices further. “Home prices continue on their downward spiral with no relief in sight,” says David Blitzer, chairman of the S&P index committee.

Prices will fall at least 3% more this year “and perhaps even further next year,” says economist Paul Dales of Capital Economic.

U.S. home prices are down 33% from their 2006 peak. It’ll be another decade or so before prices regain that ground, predicts Celia Chen, director of housing economics at

“If you bought a home since 2000, you’re probably worse off,” says economist Patrick Newport of IHS Global Insight.

Lower home prices are good news for buyers. At current levels, housing appears more undervalued now than at any time in the past 35 years, based on the historical relationship between home prices and incomes, Dales says.

Yet, many people can’t take advantage. Almost a quarter of U.S. homeowners with mortgages have no equity in their homes, so it’s hard to sell and buy anew, unemployment is high, and lenders want larger down payments to help reduce the risk of more price drops. That makes it harder for some to get loans.

S&P’s 20-city composite index in March fell below its earlier reported low in April 2009, meaning housing has hit a “double dip” across much of the nation, S&P says. Prices fell in 19 of the 20 metropolitan areas in March from a year earlier, but not in Washington, D.C., where prices rose 4.3%

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