Survey: Home Prices Down in Most Major US Cities

Case Shiller index says home prices down in most major US citiesWASHINGTON (AP) - U.S. home prices fell in most major cities for the second straight month, further evidence that the housing recovery will be bumpy and weigh on the broader economy in 2012.

The Standard & Poor's/Case-Shiller index released Tuesday showed prices dropped in October from September in 19 of the 20 cities tracked.

Prices in a majority of cities declined for the second straight month, reflecting the typically fall slowdown after the peak buying season. Prior to that, prices had risen for five consecutive months in at least half of the cities tracked.

Home prices are softening despite some modest progress in the depressed housing market.

Residential construction is likely to add to U.S. economic growth in 2011, the first time that has happened in four years. Still, that's mainly because apartments are being built almost twice as fast as two years ago - reflecting a surge in renting and weaker home sales.

The Case-Shiller index covers half of all U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The monthly data are not seasonally adjusted.

Atlanta, Detroit and Minneapolis posted the biggest monthly declines. Prices in Atlanta and Las Vegas fell to their lowest points since the housing crisis began. Prices rose in Phoenix after three straight monthly declines.

David M. Blitzer, chairman of S&P's index committee, said steep price drops in cities such as Atlanta, Chicago, Cleveland, Detroit and Minneapolis were particularly worrisome because their gains earlier this season were so strong.

"Atlanta and the Midwest are regions that really stand out in terms of recent relative weakness," Blitzer said. "These markets were some of the strongest during the spring/summer buying season."

Americans are reluctant to purchase a home more than two years after the recession officially ended. High unemployment and weak job growth have deterred many would-be buyers. Even the lowest mortgage rates in history haven't been enough to lift sales.

Some people can't qualify for loans or meet higher down payment requirements. Many with good credit and stable jobs are holding off because they fear that prices will keep falling.

Sales of previously occupied homes are barely ahead of 2008's dismal figures - the worst in 13 years. And sales of new homes this year will likely be the worst since the government began keeping records a half century ago.

Prices are also certain to fall further once banks resume millions of foreclosures. They have been delayed because of a yearlong government investigation into mortgage lending practices.

Home prices had stabilized in coastal cities over the past six months, helped by a rush of spring buyers and investors. But this year, prices in many cities, including Cleveland, Detroit, Las Vegas, Phoenix and Tampa, have reached their lowest points since the housing bust more than four years ago.

Foreclosures and short sales - when a lender accepts less for a home than what is owed on a mortgage - are selling at an average discount of 20 percent.

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aeschman

What did the index drop to? What was it last month? Ed

December 27 2011 at 4:58 PM Report abuse -1 rate up rate down Reply
1 reply to aeschman's comment
kngathr

http://www.standardandpoors.com/indices/sp-case-shiller-home-price-indices/en/us/?indexId=spusa-cashpidff--p-us----


hope that helps-

December 27 2011 at 5:09 PM Report abuse -1 rate up rate down Reply
larry & gail

Great Timing, I would have never thought that home prices were DOWN

December 27 2011 at 3:29 PM Report abuse rate up rate down Reply
kngathr

Housing

WOW- what a tough last 4 years in housing, the last three in a recession-like economy (if not a Great Recession like it felt). Foreclosures, people in homes “underwater”(owing more than the home is worth), ghost inventories, people in default, government programs which didn’t work, robo-signing by banks which are impersonal enough, government officials pointing fingers at everyone except themselves, etc.
That we HAVE a housing market is saying something. That it is in disarray still says even more. That we haven’t found a true balance or a way out of these inventories/foreclosures speaks to a lack of ideas and leadership. That we are all over the map speaks to the fact there are too many hands in the pie for the markets to behave like the self-cleansing mechanisms that they are- part for good reasons, part for bad.
The good news about people getting in the way of true market mechanics is that home prices are higher now than they should be- period.
The bad news about people getting in the way of true market mechanics is that uncertainty is much higher that it should be- period.
The unfortunate thing is they both go hand-in-hand. Let the markets fall and it would be short term painful, but long term certain. Prop the markets up buys time, but at the unrelenting price called uncertainty. I have a different direction for us to take.

Idea- The government (yes, I said it) could actually do some good- either directly or indirectly. They need to mandate the demolition of some of the housing glut. That is right- tear them down literally. By removing excess inventory (say 1 in 20 on banks books) the housing prices would stabilize at current or higher levels. The inventories would need to be accounted for, so as not to impact banks capitalization overall. The demolition could be considered an anti-infrastructure play. It would create demolition jobs, help home prices(start to relieve some pressure on underwater homes sooner), eventually create new jobs in construction at a much sooner point in time, remove some blights in neighborhoods(condemned buildings, vandalized homes, eyesores which are unkempt, etc.), and create tremendous certainty earlier in time moving forward.
Remember- we are in a time of a ‘new normal’, where the economy will not grow as quick as it has historically, where homes will be unloaded by boomers more so going forward- not less, where there are less home buyers coming into the market than are leaving, where most former home owners will not qualify for a mortgage for some time to come.

Idea- What about a one year moratorium on NEW home construction? You could buy a home and remodel, or you could wait (maybe pay a one-time surcharge)? The point would be this. With enough homes on the market and then some, why would we allow more homes to be built at a time when we cannot support the current home price as is? Why not make them pay-up for it OR not do it? If the argument is we would lose construction jobs, then who would do the remodeling? The sooner we settle out home prices, the sooner we can return to “normal” and the sooner REAL construction pricing and jobs return. My cousin (who has done construction on the West coast for 20 plus years says he doesn’t see construction coming back for a long time- 10 years was his number).

Side note- We will come to a point where we will need to forgive the current credit issues at a pace unheard of in history. Just planting that seed now, but it will be part of the ultimate solution. And yes, it means the very people who overstretched before and helped create this mess will benefit earlier than they should. Get over it; I have- since we will need them involved productively in our society as consumers and home owners to make it all work


More ideas at FixTheNation.com

December 27 2011 at 10:52 AM Report abuse -1 rate up rate down Reply