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March, April housing reports send grim message

Tumbling prices confirm double-dip worries


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If you're contemplating filing for bankruptcy protection, yet hoping that selling your home might help your financial situation, today's news about nationwide housing prices is not encouraging.

Low point erases 'last little bit of recovery'


According to a May 31 article in the New York Times, "Housing prices fell in March to their lowest point since the downturn began, erasing the last little bit of recovery from the depths achieved two years ago, according to data released Tuesday.

"The S&P/Case-Shiller Home Price Index for 20 large cities fell 0.8 percent from February, the eighth drop in a row. Prices are now down 33.1 percent from July 2006 peak."

Ownership rate back to '98 levels--could fall more


A day earlier the same reporter wrote, "Even as the economy began to fitfully recover in the last year, the percentage of homeowners dropped sharply, to 66.4 percent, from a peak of 69.2 percent in 2004. The ownership rate is now back to the level of 1998, and some housing experts say it could decline to the level of the 1980s or even earlier."

A May 19 piece at CNBC.com says the depressed figures are bearing out in April results, too: "Sales of previously owned U.S. homes fell in April, a trade group said on Thursday, in a sign that the country's housing market is struggling to recover from the recent financial crisis.

"Sales slipped 0.8 percent month over month to an annual rate of 5.05 million units from a downwardly revised 5.09 million in March, said the National Association of Realtors."

'Downward spiral with no relief in sight'


Speaking about the March numbers, an S&P official was quoted in a May 31 account at MSNBC.com:
“This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation,” David Blitzer, chairman of the index committee at S&P Indices, said in a statement. “Home prices continue on their downward spiral with no relief in sight.”

The glut of houses for sale, foreclosures, tight credit and weak demand have kept the housing market on the ropes even as other areas of the economy start to recover.

Poor 'price pockets' scattered about country


Another May 31 piece, at CNBC.com, also mentions Blitzer and points out that depressed prices are worse in some areas than they are in others:
Blitzer told CNBC that the decline in prices, though fairly widespread, has become more prevalent in geographic pockets—the Southwest and Southeast as well as the Michigan and Ohio manufacturing regions.

"What we've seen over the last few months despite the decline in prices is we've gone back to the old 'location, location, location' story instead of everything going down at once," he said. "California has clearly broken out of the pattern it was in, which is a big plus."

Though there had been hopes in the industry that prices were troughing and ready to turn higher, the latest trends show little hope in sight until later this year or early in 2012, he added.

Biggest 'double-dip markets' listed


CNBC also has a slideshow called "America's Biggest Double-Dip Real Estate Markets," described thus: "Although the national trend in home values is evident, local housing markets tend to vary dramatically, with several already showing a double dip in home prices. To get an idea of which local markets are seeing the biggest double dips, Zillow analyzed data for CNBC.com i n 158 metro areas to identify the cities where home values have seen the biggest recent run-ups before falling below their previous bottoms.

"Cities are ranked here based upon the magnitude of the metro area’s run-up in home prices, with each experiencing at least seven months of consecutive home price declines."

Following is the list, in order from less to worst (click on the preceding link to see the data associated with each metro market):

15. Denver

14. Springfield, Massachusetts

13. Merced, California

12. Punta Gorda, Florida

11. Greensboro, North Carolina

10. Los Angeles, California

09. Ventura, California

08. San Francisco, California

07. Santa Cruz, California

06. Worcester, Massachussetts

05. Salinas, California

04. San Diego, California

03. Boston, Massachusetts

02. Green Bay, Wisconsin

01. Gainesville, Georgia

Irony of falling mortgage rates


Diana Olick, who writes "Realty Check" columns for CNBC, addressed April sales in her May 27 installment, asking the question, "If Mortgage Rates Keep Falling, Why Are Home Sales So Bad?":
As mortgage rates continue to fall, so too are home sales. That wouldn't make sense in a normal housing market, but these are very unique times.

Credit, or lack thereof, coupled with extremely weak consumer confidence is keeping potential buyers on the fence.

Contracts to purchase existing homes plunged a far weaker-than-expected 11.6 percent in April, the heart of the spring housing season.

Foreclosed properties made up 28 percent of all home sales nationwide in the first quarter of this year, according to RealtyTrac.

That's up slightly from Q4 of 2010, but not the record 29 percent we saw a year ago. More than 107,000 bank-owned (REO) properties sold, which is actually a drop from the previous quarter and a bigger drop (36 percent) from a year ago. Foreclosed properties sold at a 35 percent discount to their non-distressed counterparts.

So here we have fewer selling but making up a larger share of total sales. That's not particularly healthy. We need to get more of these properties sold, because as I showed you on the blog Tuesday, there are hundreds of thousands of them and millions more in the potential pipeline.

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