Sixty-five percent of U.S. housing markets are worse off today than they were four years ago according to the California-based real estate research firm RealtyTrac.
The results of the survey arrive the same day as the final presidential debate and just weeks before the general election.
A year after record-setting declines, the slide in national housing prices appears to be nearing an end. CoreLogic projects overall price appreciation of 4.5% over the next 12 months.
National home prices were down less than 1% in January compared to one year earlier, and down 1.9% from the previous month, according to First American CoreLogic’s monthly home price index (HPI).
The 0.7% year-over-year decline in January was better than the 3.4% decrease in December. January’s narrowed decline comes exactly one year after the CoreLogic HPI took its biggest annual decline in the 30-year history of the index.
Excluding distressed sales, prices declined 0.4% year-over-year in January, CoreLogic said. That’s better than 3.3% in December 2009.
CoreLogic projects house prices will continue to decline another 3.7% into the spring before bottoming out in April. After prices begin to stabilize, there will be a modest recovery for the balance of 2010. Excluding distressed sales, prices are projected to decreased only another 0.9%.
Is it time to buy a house or investment property?
It Depends…
If you need a place to live and want to own a house, why not? Prices in some areas are fairly reasonable. But if you're speculating, our guess is that you'll get a better deal if you wait.
Why? House prices may be firming in some areas – that's what the Case-Shiller numbers seem to show. But nationwide, they are probably headed down for quite a while longer.
Here are four reasons why:
First, as you know, this is a depression. It will probably be long. And deep. You wouldn't know it from looking at the stock market or reading the news. The Dow went up another 114 points yesterday. Oil rose to $71. And the dollar – anticipating inflation – fell to $1.44 per euro.
But that's what bounces are supposed to look like. They look good enough so that people mistake them for the real thing… and get suckered into more losses.
This is a depression. Depressions drag down asset prices. Typically, prices become much more reasonable. And then they reach UNREASONABLE levels. House prices have become reasonable. Now they will become unreasonably cheap…
It took the Wall Street Journal an entire survey to prove what readers of this column have known for months: The housing recovery, as it plays out, will be a localized event, varying greatly city to city, neighborhood to neighborhood, street to street.
The Journal, god bless them, compiled housing data to compare inventory changes, months supply, price drops, unemployment, and default rates across 28 US metro areas. Unsurprisingly, bubble markets like Las Vegas, Phoenix, and Miami look particularly horrid, whereas areas like Dallas (which avoided much of the housing mania) and cities like Charlotte and Seattle (which are just now seeing price declines accelerate) appear to be holding up rather nicely.
But drilling deeper into the raw data reveals a housing market that's deeply bifurcated, even within individual cities.
As low-end markets experience a sharp increase in buying activity due to supply shortages and vastly lower prices, illiquid high end markets are experiencing violent price swings — typically in the southward direction. This much is already known, and the Journal's study simply shows what we're told ad nauseam: real estate is, in fact, local.
What's far more applicable to home buyers and sellers around the country, however, isn't what a few broad (yet important) data points show about what's happening in a few hundred neighborhoods all lumped together. Instead, it's where individual submarkets are headed. After all, owning a home is an investment in a neighborhood, a street, a community — not necessarily a metropolitan area at large.
Housing prices, by extension — when measured as broadly as a metro area — are basically meaningless.
