Home Prices Rise Nationwide, Vegas Bucks The Trend
But Las Vegas remained on a short list of cities where prices slumped to their lowest level in four years.
Analysts also cautioned that the increases may be temporary and don’t signal a rebound for the depressed home market.
Prices rose in 13 of the 20 cities tracked by the Standard & Poor’s/Case-Shiller home-price index, according to the April report released Tuesday. The sharpest increases were in Washington, D.C. The next-largest were in San Francisco, Atlanta and Seattle.
The index covers metro areas that together make up about 50 percent of U.S. households. It measures sale prices of select homes in those cities compared with prices in January 2000. It then provides a three-month average. The April data is the latest available.
Last year, a tax credit for first-time buyers helped boost prices. They rose nearly 4 percent from April through July before falling more than 7 percent this winter to record lows. Prices in big metro areas sank in March to their lowest level since 2002.
The 0.7 percent increase in April was the first rise since July. The positive data came with a caveat: The figures weren’t adjusted for seasonal factors, such as the buying that normally picks up in spring. Once the numbers are adjusted, prices actually fell in April.
David Blitzer, chairman of S&P’s index committee, said the rise in the index was a “welcome shift from recent months.” But he noted that much of the improvement was likely due to the start of the buying season.
“It is much too early to tell if this is a turning point or simply due to some warmer weather,” he said.
One bright spot: Even when adjusted for seasonal factors, prices rose in some markets that had been pummeled by slumping sales: Atlanta, Minneapolis, Phoenix and Portland, Ore.
On the other hand, prices in Las Vegas and five other areas, Charlotte, N.C.; Chicago; Detroit; Miami; and Tampa, Fla., have reached their lowest levels in nearly four years.
Las Vegas-based Home Builders Research reported a median existing home price of $110,000 in May, down 11.2 percent from the same month a year ago. Las Vegas home prices have fallen more than 60 percent from their 2006 peak and are nearly at 20-year lows.
The gap between median new and existing home prices has widened to more than $80,000.
“Housing affordability in Las Vegas is tremendous when we look at where home prices were just a few years ago,” Home Builders Research president Dennis Smith said. “Eventually, the housing debacle will improve and prices will slowly rise. Those that bought homes recently will feel good about their decision as prices slowly rebound, assuming they hold the property a few more years.”
Housing analyst Larry Murphy of Las Vegas-based SalesTraq said it will be interesting to see if the median price drops below $100,000 by the end of this year. He’s reporting it at $106,200 in May.
“It’s already close, but somehow I just don’t think it will happen,” Murphy said. “Nor do I think it will take 20 years for a recovery, depending on one’s definition of “‘recovery.’”
Home sales have been averaging about 4,000 a month in Las Vegas for the past couple of years, Murphy said. If 75 percent of those are vacant, as some national reports have indicated, that’s 3,000 vacant homes a month coming off the market, or 72,000 in the past 24 months.
Everyone is asking when housing prices will stop declining in Las Vegas. Murphy said it might depend on how many vacant homes are left and when they will ever go away.
In Atlanta, more than a quarter of homes sold in the past year were discounted: They sold for an average 9 percent less than they’d been listed for, according to data analyzed by the housing website Trulia.com.
Analysts noted that both buyers and sellers are reluctant to reach deals in the face of widespread price declines. And nearly 2 million foreclosures could hit the market over the next two years. Many foreclosures have been delayed while federal regulators, state attorneys general and banks review how those foreclosures were carried out over the past two years.
“All that does is kick the can down the road,” said Daniel Alpert, managing partner at Westwood Capital, a New York investment bank.
It means foreclosures will occur later and will do damage when they hit. Homes in foreclosure sell at a 20 percent discount, on average, which can hurt prices throughout neighborhoods.
The clearest sign that the home market is on its way to a recovery, Alpert said, would be if prices rise through the next few months.
Housing remains the weakest part of the economy. Sales of previously occupied homes sank in May to a seasonally adjusted annual rate of 4.81 million. That’s far below the roughly 6 million sold in healthy markets. Since the boom went bust in 2006, sales have fallen in four of the past five years.
New-home sales haven’t fared any better. They’ve fallen 18 percent in the two years since the recession ended. Last year was the worst for new-home sales on records dating back half a century.
Larger required down payments, tougher lending standards and high unemployment are preventing people from buying. Many people who can afford to buy are holding off, worried that prices have yet to bottom.
Declining prices have kept people from selling houses and moving to find jobs in growing areas. They have also made people feel less wealthy. That has reduced consumer spending, which drives about 70 percent of economic activity.
Copyright 2011 Associated Press