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THE BUST 

fornia areas, throughout the broad Washington, D.C. area, and in and
around Detroit. Many more metro areas are expected to experience only
house-price corrections in which peak-to-trough price declines remain
in the single digits. . . . It is important to note that price declines in vari-
ous markets are expected to extend into  and even .
With over  metro areas representing nearly one-half of the na-
tion’s housing stock experiencing or about to experience price declines,
national house prices are also set to decline. Indeed, odds are high that
national house prices will decline in . 

For , the National Association of Realtors announced that the number of
sales of existing homes had experienced the sharpest fall in  years. That year, home
prices declined . In , they would drop a stunning . Overall, by the end of
, prices would drop  from their peak in . Some cities saw a particularly

large drop: in Las Vegas, as of August , home prices were down  from their
peak. And areas that never saw huge price gains have experienced losses as well:
home prices in Denver have fallen  since their peak.
In some areas, home prices started to fall as early as late . For example, in
Ocean City, New Jersey, where many properties are vacation homes, home prices had
risen  since ; they topped out in December  and fell  in the first half
of . By mid-, they would be  below their peak. Prices topped out in
Sacramento in October  and are today down nearly . In most places, prices
rose for a bit longer. For instance, in Tucson, Arizona, prices kept increasing for
much of , climbing  from  to their high point in August , and then
fell only  by the end of the year. 
One of the first signs of the housing crash was an upswing in early payment de-
faults—usually defined as borrowers’ being  or more days delinquent within the first
year. Figures provided to the FCIC show that by the summer of , . of loans
less than a year old were in default. The figure would peak in late  at ., well
above the . peak in the  recession. Even more stunning, first payment de-
faults—that is, mortgages taken out by borrowers who never made a single payment—

went above . of loans in early . Responding to questions about that data,
CoreLogic Chief Economist Mark Fleming told the FCIC that the early payment de-
fault rate “certainly correlates with the increase in the Alt-A and subprime shares and
the turn of the housing market and the sensitivity of those loan products.” 
Mortgages in serious delinquency, defined as those  or more days past due or in
foreclosure, had hovered around  during the early part of the decade, jumped in
, and kept climbing. By the end of , . of mortgage loans were seriously
delinquent. By comparison, serious delinquencies peaked at . in  following
the previous recession. 
Serious delinquency was highest in areas of the country that had experienced the
biggest housing booms. In the “sand states”—California, Arizona, Nevada, and
Florida—serious delinquency rose to  in mid- and  by late , double
the rate in other areas of the country (see figure .). 