Some more positive news from the July numbers as home prices rose for the third month in a row, the data shows that housing recover is underway but it is still very fragile. The Standard & Poor's/Case-Shiller home price index of 20 major cities climbed 1.2 percent from June to a reading of 143.05. The index has risen at an 8 percent annualized rate in the three months to July, the best performance since early 2006.
The index, however, is down about 33 percent from the peak in mid-2006. Home prices are now at levels not seen since the third quarter of 2003. And prices in Las Vegas, Detroit and Seattle are still falling, on a seasonally adjusted basis.
Home prices continue to fall and are 13.3 percent below July a year ago. The annual declines have manifested in all 20 cities that the report covers. This decline has been reported for six straight months.
In Alameda, we have seen median home price rise and the inventory has been sucked up over the past three months. The Island reached a 45 week low of 122 units. This is 32 percent decline in 10 weeks. Normally low inventory means a price will begin to rise. A preliminary look at September sales shows that this may be the fact.
There are still several risks to the national housing recovery, including rising unemployment and foreclosures and the expiration of a tax credit for first-time home buyers.
The biggest factor, in my opinion, still weighing on the housing sector is jobs and wages. Wages in the United States are lagging and have declined 5 percent year-over-year and job loss continues to grow. This segment of the economy needs to stabilize for housing to correct.
As I have written about in the past, the shadow inventory of distressed properties will have a major impact. If the banks are still holding on to a large number of homes and they flood the market in the spring this will destabilize the housing market.
Some experts believe that the housing market has hit bottom. Low price inventory has cleared in many cities and bidding wars have evolved in many of these areas. The upper levels of the market are having more trouble with higher priced homes sitting longer.Places like Las Vegas that had a gamblers feel to housing was one of the most speculative markets during the boom. As quick as you win in Vegas you also lost with homes down almost 55 percent from their peak. In August, almost 80 percent of home resales in Nevada were either a foreclosure or a sale below the value of the mortgage, according to a survey by the National Association of Realtors. The Detroit housing market is reeling from layoffs in the automotive industry. Seattle, by contrast, was one of the last areas to enter the downturn so prices there have yet to hit bottom.
The Alameda Real Estate market has been more like Austin, TX and Salt Lake City, UT where the pullback has been more moderate. The good part for Alameda homeowners is the region is bouncing back.Home prices rose in 13 metro areas for at least three straight months. The biggest gains in July were in Minneapolis, San Francisco and Chicago.
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