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Metro Home Values Drop Again in April

Biggest decline on record, no bottom in sight

By Mark Huffman
ConsumerAffairs.com

June 24, 2008

The index was down 14.3 percent in March and has declined every month this year, suggesting the housing market has not yet bottomed.

The April index showed all 20 metropolitan areas in the survey posting annual declines. Thirteen record low annual declines, and 10 of the declines were in double digits.

"There might be some regional pockets of improvement, but on an annual basis the overall numbers continue to decline," said David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. "All 20 MSAs are now showing declines with Charlotte, the last holdout during the 2007/early 2008 period, now reporting an annual decline of 0.1%."

Blitzer points to one possible bright side to the annual figures; three MSAs – Chicago, Cleveland and Denver – while still negative, showed some improvement over the previous month.

Looking at the monthly statistics, eight areas were positive for the April-over-March reading. But for those that reported monthly declines, seven were in excess of two percent. The monthly data also show that 12 of the MSAs have now declined every month since September 2007, marking eight consecutive months.

Las Vegas and Miami continue to share the dubious distinction of being the weakest markets over the past 12 months returning -26.8% and -26.7%, respectively. These two markets witnessed some of the fasted appreciation of the 2004-2005 period, rising 53 percent and +32 percent respectively.

Pending sales

It's the highest index since last October, but remains 13.1 percent lower than April 2007 when it stood at 101.5. Still, its enough to make real estate agents and home sellers want to break out the Champagne.

The National Association of Realtors says a modest gain in the level of home sales is possible over the next couple months, and an improvement may be in the works for the second half of the year. That is, as long as home buyers get access to reasonable financing, something that is far from a certainty.

Lawrence Yun, NAR chief economist, said pending sales contracts have picked up notably in areas undergoing significant price drops.

"Bargain hunters have entered the market en masse, especially in areas that have experienced double-digit price declines, but it's unclear if they are investors or owner-occupants," he said. "Sharp price reductions are leading to a quicker discovery of price equilibrium points. The West is already seeing year-over-year gains in pending contracts."

The PHSI in the West rose 8.3 percent to 98.8 in April and is 4.0 percent higher than April 2007. In the Midwest, the index jumped 13.0 percent to 83.7 in April but remains 13.1 percent below a year ago. The index in the South increased 4.6 percent to 88.8 but is 22.5 percent below April 2007. In the Northeast, the index declined 1.9 percent in April to 79.3 and is 12.2 percent below a year ago.

It's a turnaround since last month, when it was reported that sales of existing homes dropped a full percentage point in April, with the inventory of unsold homes rising more than ten percent to 4.55 million units.

The National Association of Realtors said than that the housing recovery was being hindered, in part, by what it called restrictive lending practices. It said it saw evidence of growing interest by prospective home buyers, but some are still having difficulty finding financing.

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