Despite some encouraging housing trends at the end of the year, one fact remains clear; home prices are not rising, they're falling.
In its report for November, S&P Case-Shiller found home prices in 10 major U.S. metropolitan areas declined 1.3 percent from the previous month. Nineteen of 20 major metro areas covered by the S&P Case-Shiller indicies saw lower home prices in November.
In fact, the 10 and 20-City Composites posted annual returns of -3.6 percent and -3.7 percent versus November 2010, respectively. These are worse than the -3.2 percent and -3.4 percent respective rates reported for October.
Atlanta property values lagging the most
In addition to both Composites, 13 of the 20 Metropolitan Statistical Areas (MSA) saw their annual returns decrease compared to October’s data. New York and Tampa saw no change in annual returns in November; while Charlotte, Cleveland, Denver, Minneapolis and Phoenix saw their annual rates improve. At -11.8 percent Atlanta continued to post the lowest annual return. Detroit and Washington DC were the only two cities to post positive annual returns of +3.8 percent and +0.5 percent, respectively, in November.
“Despite continued low interest rates and better real GDP growth in the fourth quarter, home prices continue to fall,” said David M. Blitzer, Chairman of the Index Committee at S&P Indices. “The only positive for the month was Phoenix, one of the hardest hit in recent years.”
Where are the buyers?
Ordinarily, lower prices and the current rock-bottom interest rates would draw more buyers into the market, but that isn't happening. The National Association of Realtors (NAR) points to increasingly tough lending requirements, meaning fewer would-be home buyers can qualify for a mortgage. In most cases, lenders are demanding a 20 percent down payment.
The news isn't getting any better for home buyers, either. Regulators are considering new lending guidelines that would define “quality” mortgages as those with at least a 10 to 20 percent down payment. The Center for Responsible Lending says that will shut even more people out of the housing market.
“The results are particularly striking for African-American and Latino home buyers,” CRL said in a report earlier this month. “A mandatory 20 percent down-payment requirement would exclude about 75 percent of African-American and 70 percent of Latino borrowers who could be successful homeowners from obtaining fairly priced mortgages.”
