May 31st, 2011
The Chicago Tribune
By: Mary Ellen Podmolik
National home prices hit a new low in March, giving credence to long-simmering worries about a double dip in the housing market.
The widely-watched S&P/Case-Shiller home price index showed that both nationally and in the Chicago area, home prices fell below their previous lows, causing the report’s authors to declare an official double dip in home prices. In the U.S., home prices plummeted to their mid-2002 levels. In the Chicago area, prices in March were at levels not seen since April 2001.
The Chicago area has been one of the country’s weak spots for months, and local home prices have been falling since November 2010. In March, according to the index, home prices slipped 2.4 percent from February, and were down 7.6 percent on an annualized basis.
Condominium values plummeted even further in the Chicago area. In March, they fell to levels not seen since March 2000. Condo prices in March fell 4.5 percent since February and were down 13.5 percent on an annualized basis.
Maureen Maitland, a S&P vice president, attributed the continued bad news to the varying states of recovery in regional economies, a general lack of confidence in the housing market and an oversupply of homes, including foreclosure inventory that is dragging down prices.
“If you can hang onto a house right now and you don’t have to sell, you don’t,” Maitland said. “All indications are that prices are going to continue to fall.”
Last week, RealtyTrac said sales of foreclosed properties in Illinois made up 29 percent of home sales during the first quarter, and that the average price of a foreclosed home was $132,983, a discount of almost 41 percent from prices of non-foreclosed homes.
Other cities that also posted new housing price index lows in March were Atlanta, Charlotte, Cleveland, Detroit, Las Vegas, Miami, Minneapolis, New York, Phoenix, Portland and Tampa.
Washington, D.C., was the only city to report a small uptick in March prices compared with February and a year ago.
February 23rd, 2011
By: Les Christie
Home prices took a big hit at the end of 2010, even as the rest of the economy gained steam.
National home prices fell 4.1% during the last three months of 2010, compared with 12 months earlier, according to the latest report from the S&P/Case-Shiller home price index, a closely watched indicator of market trends. They were down 1.9% compared with three months earlier.
“Despite improvements in the overall economy, housing continues to drift lower and weaker,” said David Blitzer, spokesman for S&P.
And things may get a lot worse, said Robert Shiller, a Yale economist and half of the Case-Shiller team, in a web conference after the report’s release.
“There’s a substantial risk of home prices falling another 15%, 20% or 25% more,” he said.
Shiller cited a few reasons for his bearish stance. The government is expected to reduce the presence of Fannie Mae and Freddie Mac in the housing market. These agencies currently provide loan guarantees for about two-thirds of mortgages. If they fade away, private mortgage money will have to fill the gap and the cost of mortgage borrowing will surely rise. That will hurt home prices.
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There’s also talk of possibly ending the mortgage interest tax deduction for many homeowners. Meanwhile, the weak economic recovery may be threatened by higher oil prices as a result of turmoil in the Mideast.
At the web conference, Shiller’s index partner Karl Case wasn’t much more optimistic.
“I see [the market] bouncing along the bottom with a slight negative trend,” said Case, an economics professor emeritus at Wellesley College.
A widespread drop
On a seasonally adjusted basis, the national index surpassed the low it hit in the first quarter of 2009.
The decline was widespread, with 18 of the 20 large cities covered by a separate S&P/Case-Shiller index recording losses for the year. The only gains were posted by Washington, which was up 4.1%, and San Diego, which saw prices climb 1.7%.
The biggest loser for the year was Detroit, where prices dropped 9.1%.
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“We’re really close to being at the bottom again,” said S&P’s Maureen Maitland. “Last year’s gains came courtesy of the tax incentives and the market is not holding up on its own.”
The impact of homebuyer tax credits ended back last spring, and the two quarters of data since then reflect that. Prices fell steeply during the third quarter, down 3.3%. When the credit was in effect, prices rose consistently, up four out of five quarters starting in the second quarter of 2009.
S&P reported that both the company’s 10- and 20-city indexes also fell month over month. In three cities, Detroit, Cleveland and Las Vegas, home prices have dropped below their January 2000 levels — yes, you’d have to go back to the past millennium to find lower prices there.
Eleven markets, including New York and Chicago, have reached their lowest levels since home prices peaked in 2006 and 2007.