Data through January 2011, released today by Standard & Poor’s for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, show further deceleration in the annual growth rates in 13 of the 20 MSAs and the 10- and 20-City Composites compared to the December 2010 report. The 10-City Composite was down 2.0% and the 20-City Composite fell 3.1% from their January 2010 levels. San Diego and Washington D.C. were the only two markets to record positive year-over-year changes. However, San Diego was up a scant 0.1%, while Washington DC posted a healthier +3.6% annual growth rate. The same 11 cities that had posted recent index level lows in December 2010, posted new lows in January.
“Keeping with the trends set in late 2010, January brings us weakening home prices with no real hope in sight for the near future” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “With this month’s data, we find the same 11 MSAs posting new recent index lows. The 10-City and 20-City Composites continue to decline month-over-month and have posted monthly declines for six consecutive months now.
“These data confirm what we have seen with recent housing starts and sales reports. The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery. At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing. A few months ago we defined a double-dip for home prices as seeing the 10- and 20-City Composites set new post-peak lows. The 10-City Composite is still 2.8% above and the 20-City is 1.1% above their respective April 2009 lows, but both series have moved closer to a confirmed double-dip for six consecutive months. At this point we are not too far off, and that is what many analysts are seeing with sales, starts and inventory data too.
From the Washington Post:
Home prices dropped in nearly all major housing markets in the country in January, according to price index numbers released Tuesday. Analysts said the decrease might be a harbinger of a double-dip recession in the housing market.
The S&P/Case-Shiller 20-city composite index fell 3.1 percent from its January 2010 level. The 10-city index declined 2 percent.
Patrick Newport, an economist with IHS Global Insight, said normal seasonal factors probably account for nearly half of the decline in S&P’s index for December and January
“I don’t think the numbers were that ugly,” he said. “Prices are slowly coming near bottom. They’re not in a free-fall like they were in 2009.” Using his estimates, he expects housing prices nationally to decline another 5 percent and hit bottom — a double dip — in the second half of this year.
Damage from the housing bust is spreading to areas once thought to be immune.
In at least 14 major U.S. metro areas, prices are now at 2003 levels – when the housing bubble was just starting to inflate. Prices will likely fall further this year, making many people reluctant to buy or sell. That would push down sales and prices more.
The depressed housing industry is slowing an economy that has shown strength elsewhere. And it’s starting to hurt those who bought years before the housing boom began. In some cities, people who have paid their mortgages for a decade have little or no home equity.
Prices have tumbled in familiar troubled spots, such as Las Vegas, Cleveland and Detroit. But they’re also at or near 10-year lows in Denver, Atlanta, Chicago and Minneapolis – cities that weren’t as swept up in the housing boom and bust.
“It’s been tough on the lower class but it’s filtering up,” said Paul Dales, senior U.S. economist with Capital Economics. “It may be only a matter of time before it hits the wealthy.”