NEW YORK CITY-Home prices are continuing to tumble downward despite some slight glimmers of hope in major metropolitan areas, according to January figures released by S&P Case-Shiller on Tuesday morning. Pricing for 20 US cities declined by 0.8% from December 2011, sliding back to the levels where they were nearly a decade ago in early 2003.
David M. Blitzer, chairman of the index committee at S&P Indices, says that eight cities – including Atlanta, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa – have hit new lows, and only Washington, DC, Phoenix and Miami have shown improvements. S&P’s 10-city composite was down 3.9% and the 20-city was 3.8% compared to January 2011. With the new lows, both are now 34.4% off their relative 2006 peaks.
Gary Painter, an economist with the USC Lusk Center for Real Estate, says that falling prices are not so much a reflection of market health, but rather the result of banks disposing of distressed assets by offering low prices to cash buyers.
“As these distressed properties are taken off the market, that trend will end,” he says, in a statement. “When employment and rents increase at the local level, more buyers will see the value of entering the single-family market. If the economy continues moving in this direction, it is likely we have seen the bottom and are moving toward recovery.”
Jed Smith, managing director for the quantitative research at the National Association of Realtors, tells GlobeSt.com that home prices have actually displayed small gains across the country. NAR, which measures home pricing and sales on a month-to-month basis, has reported increases as of February 2012.
“We are showing a plus of .03%,” he says, noting that these data take the entire country into account, and not just 20 cities. “We see the market as sort of in the bottoming out phase.”
And as job growth slowly begins to pick up, Smith says approximately 10 million people are projected to form households in the coming years, which in turn, has lead to an increased demand for homes.
“We are short a number of families so to speak that were not formed during the recession, possibly because people doubled up, lived with their parents, lived in dorms or went back to school, he says. “We think that will present some impetus to housing market, although obviously not all those people this year, by any means, but there’s going to be some pent-up demand that over the next four or five years will work its way through the market.”
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
