The Fall of Home Prices Nationally Continues

Today, starts the release of a fresh batch of housing report with The Standard & Poor's/Case-Shiller home-price index for March is due today, the National Association of Realtors releases April home-resale data Wednesday, and the Census Bureau releases new-home-sales numbers Thursday.

These numbers will be the first indication if home sales and construction are at the bottom and could soon rise. Most Economists and industry expects expect to see in this week's numbers a confirmation that the swing has leveled.

For housing to recovery prices must stop falling. For Alameda we saw April of this year stop the slide of both median and average sale price. The concern is the month-to-month volume is small and variations in these numbers are easily manipulated by just a few sales.



Link to Larger Chart

The news from Case-Shiller Home Price Indices Prices showed that the falling prices have not stopped, but have slow down. U.S. single-family homes fell 18.7 percent in March from a year earlier and 19.1 percent in the first quarter, the most in its 21-year history. Home prices have fallen 32.2 percent since peaking in the second quarter of 2006 and are at levels not seen since the end of 2002.

All 20 cities in the index showed monthly and annual price declines, with nine setting annual records. Fifteen cities posted double-digit drops and three cities — Phoenix, Las Vegas and San Francisco — all recorded declines of more than 30 percent.

Nationally an avalanche in the supply of housing has driven prices down and will keep a lid on prices even as demand rises. Six months of inventory is considered balanced and given the inventory levels the market still has a long road to recovery. Currently, national existing-home inventories are down to 9.8 months' supply, but off their recent peak of 11.3 months. In Alameda, using a four month median of sales, the Island is carrying a little more than seven months of inventory.

Last week we discussed a massive shadow inventory of bank- and investor-owned homes. This inventory could be enough to push existing-home supply pass 12-months. Based on the RealtyTrac numbers we reported last week a 192 properties have yet to hit the open market, that would push Alameda’s inventory beyond 15-months.

The states of Nevada, Florida, Michigan and California, also have unemployment rates above the national average, inhibiting demand. Many areas with big overhangs also are riddled with distressed sales, which comprise more than 50% of total sales in some metro areas of California, Arizona and Nevada.

As long as prices are falling, banks will take more losses, consumers will wait to buy.

Tumbling Down

Yesterday, it was reported that U.S. home prices tumble at record pace with home prices off 18.5 percent in December from the prior year according to two housing indexes.

As we talked about in yesterday's post, the Federal Government’s new “Homeowner Affordability and Stability Plan” may find more people ineligible as prices fall, because homeowners may not qualify. The estimated 5 million borrowers in good standing who are current on their payments but owe from 80 percent to 105 percent of their home's value would be able to refinance into a lower interest-rate loan.

Nationally, home prices have fallen to 2003-levels, and half of the metro areas in the 20-city Case-Shiller Home Price Index have lost more than 20 percent of their values from their peaks in 2006. The Federal Housing Finance Agency also reported that prices saw their largest annual decline on record since 1991; dropped 8.2 percent from 2007 to 2008.

The Case-Shiller Report revealed that San Francisco saw home values lose more than 30 percent in December. In Alameda, those on the Island saw a 10% decrease from December 2006 to the same month in 2008. The year-over-year change was 4.3%.

December 2006 median $615,000

December 2007 median $588,000

December 2008 median $552,500

The more startling number is if you look at 24-months of median pricing and see the 20% swing from a high in September 2007 to the low in September 08. Because of the low sales volume in Alameda the swings in median can move pretty dramatically.

If you look at the Alameda 2007 median home price verse the 2008 you will see about a 7.5% decline in price. I think that this more of a reflection of the actual market, but we are seeing several individual properties with bigger declines. The next three months will give us a true feeling of the direction of the market as we enter the traditional buying season.

12-months 2007 median price $649,000

12-months 2008 median price $600,000

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