From the Record:
Home prices are still falling, but not as quickly, the Standard & Poor’s Case-Shiller home price index said Tuesday. Prices nationwide were down 13.3 percent in July from July 2008, while prices in the New York metropolitan area, which includes North Jersey, were down 10.3 percent.
“We believe that once the tax credit expires, prices will resume their downward trend, falling another 5 percent from current levels, as rising foreclosures and a glut of unsold homes come back to center stage,” said Patrick Newport, an economist with IHS Global Insights in Lexington, Mass.
“There are considerable impediments to any robust rebound in [housing] prices,” he said. “Prices are not getting back to where they were at their peak anytime soon.”
In Bergen County, according to separate data from the RealSource Association of Realtors, the median price of a single-family home declined 13.4 percent from July 2008 to July 2009, to $447,500. The number of home sales rose from 503 in July 2008 to 547 in July 2009.
In Passaic County, according to data from the Garden State Multiple Listing Service, the average home price in July fell to $349,000, 10.5 percent below a year earlier. The number of home sales was stable year over year, with 267 condos and single-family homes sold, an uptick from the 262 sold in July 2008.
I’m not a bear, I’m a realist. Let’s get that out first.
Today’s headlines from the folks at S&P/Case Shiller are not untrue, they’re just not the whole picture. Yes, home prices, in most areas (and by no means everywhere) are no longer in freefall. Some local markets have hit bottom, others are falling less precipitously, and still others are showing some strength.
But if we’re going to be forced to spew these national numbers, that the markets seem to crave (for some reason that I generally and specifically don’t understand), then we have to take them with not a grain, but a shaker of salt.
Because whether we’re in a housing boom or bust, home prices always rise in the spring/summer months, due to the type of buyer largely in the market.
Families, i.e. move-up home buyers, looking to close and move over the summer so as not to disrupt school, dominate the market in the spring and summer.
They are, for the most part, buying larger, more expensive homes, and they therefore skew the median home price in their market higher.
In the fall and winter, you tend to see more first-time buyers as well as more single buyers who want smaller, lower-priced homes.
So, the question going into the fall, as that tax credit nears expiration Nov. 30th, is can this price trend continue? I doubt it. The other issue of course is foreclosures, which fell in June and July due to a process delay by banks, as they ramped up the government’s loan modification program. There were also some state moratoria in effect as well.
There is now an estimate out there that rising foreclosures will add 7 million homes to the for-sale inventory over the next two years. Inventories of new and existing construction have been falling, but that could U-turn this fall, as foreclosures rise, banks let go of the homes that didn’t qualify for modifications, and job losses push good quality borrowers into default. Pile that on top of seasonality, and I’d watch for home prices to dip again as we get readings on the fall months.
Home values in 20 U.S. cities climbed in July by the most in almost four years, helping stem the record plunge in household wealth that’s depressed spending.
The S&P/Case-Shiller home-price index rose 1.2 percent in July from the prior month, the biggest gain since October 2005, the group said today in New York.
From a year earlier, the S&P/Case Shiller index was down 13.3 percent, less than economists anticipated and the smallest decrease in 17 months.
The measure was forecast to fall 14.2 percent, according to the median projection of 36 economists surveyed by Bloomberg News. Estimates ranged from declines of 12.5 percent to 15 percent. It was down 15.4 percent in the 12 months ended in June.
Compared with the prior month, 17 of the 20 cities covered showed an increase, led by a 3.1 percent jump in Minneapolis and a 2.9 percent increase in San Francisco. Las Vegas suffered the biggest one-month decrease at 1.9 percent.