The Standard&Poor’s/Case-Shiller Home Price index published this month shows that home prices have declined nationwide by 4.1% over the previous year - but that Seattle home prices have fared over 50% worse than the national average.
The S&P/Case-Shiller Home Price is the leading measure of US home prices. It is published monthly by Standard&Poor’s, using a three-month moving average, with a two-month time lag, so the figures published this week reflect home prices up to July 2011.
S&P’s 20-city composite index shows that, although home prices rose by 0.9% in the month from June to July 2011, they are down by 4.1% compared to July 2010. The June-July increase, as well as small home price increases in the previous three months, reflect a normal seasonal upswing. However, S&P’s Chairman of the Index Committee, David Blitzer, told DSNews that the rate of the July increase was a better-than-usual price increase.
The bad news in the numbers comes for the Seattle area, though. Seattle home prices were down by 6.4% over the previous year - a performance more than 50% worse than the 4.1% drop seen nationally. And the month-over-month increase from June to July for Seattle was a negligible 0.1%.
Only two of the 20 cities used in the index showed price increases for the year. These recent drops bring home prices back down to where they were in 2003 - what some are referring to as “the lost decade in the housing market.” Prices are now down 32% from their peak in 2005, and nearly $7 trillion have been lost in homeowners’ equity through the period.
Stan Humphries, chief economist for the online mortgage marketplace Zillow, told DSNews that he expects only a weak performance from the housing market through the remainder of the year.
Many analysts tie the recent home price increases to the recent drop in foreclosure filings. As we reported to you earlier this month, foreclosure processing times have reached record highs. Since foreclosures tend to sell at lower-than-market prices, the effect of less foreclosure sales is to raise average sales prices for an area. As discussed in an analysis by Bloomberg, investigations into banks’ foreclosure practices which have slowed foreclosure filings may have also helped to slow the drop in home prices (the 4.1% drop was not as high as analysts had predicted a year ago).
However, as banks catch up on their paperwork and bring up the pace of foreclosure filings, home prices may experience increased downward pressure. The Bloomberg article notes that foreclosure filings surged by 33% in August compared to the previous month - a sign that the foreclosure process may be speeding up again.
And that home prices may continue their slide downward.
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