Home Prices End 2010 Moving Lower

The price of the average U.S. home declined nearly four percent in the fourth quarter of 2010, according to the latest Standard & Poor's/Case-Shiller Home Price Indices, which measure the value of American homes.

The company said it's the lowest growth rate since the third quarter of 2009, when prices were falling at an 8.6 percent annual rate.

As of December 2010, 18 of the 20 Metropolitan Statistical Areas (MSA) covered by S&P/Case-Shiller Home Price  Indices and both monthly composites were down compared with December 2009. Both Los Angeles and San Francisco reported negative annual rates of return in December, leaving San Diego and Washington, DC, as the only two cities where home prices are increasing on a year-over-year basis.

Home prices rose  1.7 percent in San Diego and 4.1 percent in Washington.

The report essentially means that -- depending on the market -- you should not pay more for a home than you would have in the first quarter of 2003, early in the housing bubble.

Back to early 2003                                   

Not only are home prices back to their 2003 levels, Case-Shiller says they are very close to the first quarter of 2009 trough, raising the specter of a double-dip housing recession. Thirteen of the 20 MSAs and both monthly composites saw their annual growth rates fall in December versus November.

"We ended 2010 with a weak report," said David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. "Despite improvements in the overall economy, housing continues to drift lower and weaker."

But like politics, all real estate is local. In the 2006-to-2009 period Blitzer says all cities saw prices move together, but that's not the case now. Some areas are healthier than others.

On the rebound

"California is doing better with gains from their low points in Los Angeles, San Diego and San Francisco," Blitzer said. "At the other end is the Sun Belt -- Las Vegas, Miami, Phoenix and Tampa -- all four made new lows in December. Also seeing renewed weakness are some cities that were among the last to reach their peaks including Atlanta, Charlotte, Portland, Ore., and Seattle, where news lows were also seen. Dallas, which peaked late, has so far stayed above its low marked in February 2009."

In some areas, housing prices are even below their 2003 levels. Cleveland, Detroit and Las Vegas have the dubious distinction of average home prices now below their January 2000 levels.