If you look at the latest S&P/Case-Shiller (CSI) home price index for March and compare it with RealtyTrac’s foreclosure data you can see a clear correlation between elevated foreclosure activity and home price declines.
Nationally, the average sales price of a single family home fell 1.9 percent from a year ago to a new post housing crisis low, according to Case-Shiller. While some pundits claimed that the Case-Shiller numbers pointed to a bottoming out of the real estate market, the trend line I’m looking at is still going downward. Although the rate of decline has eased, prices are still decreasing.
But housing, like politics, is local.
And the Case-Shiller numbers vary from market to market. Some markets, including Miami and Phoenix, showed annual price increases, but 13 markets — including Atlanta, Chicago, Las Vegas, New York and Portland — fell year-over-year. Atlanta took an 18 percent plunge. Chicago dipped 7.1 percent, while prices in Las Vegas fell 7.5 percent. In New York and Portland, home prices slid downward by 2.8 percent.
Only seven of the 20 cities it tracks showed annual price increases, including Charlotte (0.4 percent), Dallas (1.5 percent), Denver (2.6 percent), Detroit (2.3 percent), Miami (2.5 percent), Minneapolis (3.3 percent) and Phoenix (6.1 percent).
Foreclosures, excess supply and weak demand will continue to drive homes prices down a bit further in markets with high REO inventories and short sale activity.
Moreover, the index is down 35 percent from its peak before the housing bubble burst in 2006.
We should be cautiously optimistic about housing. There are still too many bank-owned foreclosures and underwater borrowers to claim a recovery is at hand.
Readers what do you think? Do the Case-Shiller numbers point to a bottoming out of the real estate market?
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