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Home Prices Fall, But News Is Less Bad For Homeowners

Housing market could be nearing bottom

June 30, 2009

Figures through April 2009, measured by the S&P/Case-Shiller Home Price Indices, show that, although still negative, the annual decline of the 10-City and 20-City Composites improved.

The 10-City and 20-City Composites declined 18.0 percent and 18.1 percent, respectively, in April compared to the same month in 2008. These are improvements over their returns reported for March, down 18.7 percent for both indices. For the past three months, the 10-City and 20-City Composites have recorded an improvement in annual returns. Record annual declines were reported for both indices with their respective January data, -19.4 percent for the 10-City Composite and -19.0 percent for the 20-City Composite.

"The pace of decline in residential real estate slowed in April," said David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. "In addition to the 10-City and 20-City Composites, 13 of the 20 metro areas also saw improvement in their annual return compared to that of March."

Furthermore, every metro area, except for Charlotte, recorded an improvement in monthly returns over March. While one month's data cannot determine if a turnaround has begun, Blitzer says it seems that some stabilization may be appearing in some of the regions. He says it may take some time to determine if a recovery is really here.

"The stock market bottomed in March and measures of consumer confidence have turned upward. This report shows that these better spirits are also appearing in the housing market," Blitzer said.

As of April 2009, average home prices across the United States are at similar levels to where they were in the middle of 2003. From the peak in the second quarter of 2006, the 10-City Composite is down 33.6 percent and the 20-City Composite is down 32.6 percent.

In terms of annual declines, the three worst performing MSAs continue to be the same three from the Sunbelt. Phoenix was down 35.3 percent in April, Las Vegas declined 32.2 percent and San Francisco fell 28.0 percent. Denver, Dallas and Boston continue to fare the best in terms of annual declines down 4.9, 5.0 and 7.7 percent, respectively.

Charlotte, Chicago, Cleveland, New York, Portland and Seattle posted record annual declines in April. For the month Dallas was the best performer returning +1.7 percent, while Las Vegas was the worst performer down 3.5 percent.

Looking at the data from relative peaks-through-April 2009, Dallas has suffered the least, down 9.6 percent from its peak in June 2007; while Phoenix is down 54.1 percent from its peak in June of 2006. Excluding Dallas, all of the 20 metro areas are in double digit declines from their peaks, with 10 of the MSAs posting declines of greater than 30% and two of those — Phoenix and Las Vegas — in excess of 50 percent.

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