From the Record:
Despite signs of an economic recovery, home prices nationally and in the New York metropolitan area, including North Jersey, continued to slide in January, the Standard & Poor’s Case-Shiller index reported Tuesday.
Home values in the region dropped 2.9 percent from January 2011 to January 2012. Nationally, home prices dropped 3.8 percent.
“Prices collapsed between 2007 and 2009, have been mostly inching down ever since, and signs of a turnaround are nowhere in sight,” said Patrick Newport, an economist with IHS Global Insight. “Our view is that foreclosures, excess supply, and weak demand will drive home prices down at least another 5 percent.”
Home prices in the region have dropped 25 percent since the market peak in mid-2006, and are now at the levels of late 2003. Nationally, home prices have declined an average 34 percent and have returned to early 2003 levels. In four metropolitan areas — Atlanta, Cleveland, Detroit and Las Vegas — home values are now below their levels in 2000.
The report came a day after East Brunswick appraiser Jeffrey Otteau said that the New Jersey spring home-buying market will be the busiest in four years — though he also predicted that home prices will remain flat this year.
In Passaic County, the median price was $243,619, down 11 percent from a year earlier, while the number of sales rose 33 percent.
Home prices in 20 U.S. cities dropped at a slower pace in January, pointing to stabilization in the real estate market.
The S&P/Case-Shiller index (SPX) of property values in 20 cities fell 3.8 percent from a year earlier, matching the median forecast of 32 economists surveyed by Bloomberg News, after decreasing 4.1 percent in December, a report from the group showed today in New York. Prices were little changed in January from the prior month, the best performance since July.
Property values are steadying as a strengthening labor market underpins housing demand, which may allow the industry that precipitated the recession to contribute to growth this year. Nonetheless, the recovery in sales may be restrained by foreclosures that are putting more properties onto the market.
“We are starting to see a slightly less-negative picture,” said Sean Incremona, a senior economist at 4Cast Inc. in New York, who correctly projected the decline. “We have seen some slight progress from very depressed levels, but there’s still a long, long way to go.”
From the WSJ:
Home prices continue to tumble, according to S&P’s Case-Shiller home-price indexes.
U.S. home prices dropped in January from a month earlier, with the average home price dropping back to levels last seen in 2003.
The S&P Case-Shiller index dropped 0.8% from a month earlier. Year-over-year prices fell 3.9% in the index’s 10 major markets, while the 20-city index dropped 3.8%.
Here are a smattering of reactions from economists and market observers:
Peter Boockvar of Miller Tabak: Bottom line, the housing numbers seen over the past week have been mostly below expectations pointing to a still tough industry but one that isn’t getting much worse with signs of stabilization in some markets. Prices will likely still fall and purchase deals will still be held up by tight lending standards and strict appraisals but generally speaking most of the damage has already been done.
Dan Greenhaus of BTIG: We have been arguing that housing as a whole bottomed in late 2010/early 2011 and, more importantly, this summer would mark the six year anniversary of the peak in home prices. Historically, housing bubbles tend to see home prices on average bottom out six years after peaking. As such, if the United States were to suffer a decidedly average housing crash, this summer would mark the point at which prices should begin turning upwards on a sustained basis.
Joshua Shapiro of MFR: The enormous supply overhang of existing homes (factoring in all those in foreclosure or soon to be) promises to keep pressure on prices for some time. From a longer-term perspective, it is important to keep in mind that in the seven years leading up to the peak in July 2006, the non-seasonally adjusted national 20 city home price index jumped by 155% (126 index points) to a high of 206.52 (January 2000=100). So far, this index has dropped by 34% (71 index points) since its peak. We look for further declines to be registered in the quarters ahead, although in all likelihood the rate of deterioration will be nowhere near as steep as that recorded earlier in the cycle.
TD Securities: On the whole, the dramatic moderation in the pace of home price depreciation in January is very encouraging, especially as it may be an indication that home prices may finally be stabilizing. And with home sales beginning to show signs of improvement and labor market activity also providing a favorable backdrop for the housing sector, we may now be witnessing the bottom in home prices.